'Your World' on inflation, grocery shortages

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Inflation jumps at fastest clip in nearly 40 years

Fox Business' Susan Li and Slatestone Wealth chief strategist Kenny Polcari weigh in amid fastest consumer price hikes since 1982.

This is a rush transcript of "Your World with Neil Cavuto" on January 12, 2022. This copy may not be in its final form and may be updated.

CHARLES PAYNE, FOX NEWS ANCHOR: FOX on top of prices over the top and shoppers under siege.

Prices jumping 7 percent in December to the highest level in nearly 40 years, everything from bacon and eggs to beef and gasoline seeing huge price spikes. President Biden says the administration is -- quote -- "making progress" on slowing the rate of price increases, but Americans, at least for now, may not be feeling it.

Inflation expected to be a big topic when the White House holds its briefing this hour. We will go to it once it begins.

Welcome, everyone. I'm Charles Payne, in for Neil Cavuto. And this is YOUR WORLD.

To FOX Business' Susan Li with more on what's driving this inflation surge -- Susan.

SUSAN LI, FOX NEWS CORRESPONDENT: Charles, that's right.

Get used to these higher prices, because they're going to be here for a while. You're paying the highest price jumps in 40 years in December, so consumer prices, as you mentioned, rising 7 percent last month. And that is the highest year-over-year increase since the summer of 1982, with prices rising almost twice as much as wages were last month.

So there's still sticker shock when you go to the grocery stores. Food prices were up 6 percent. Filling up your gas tanks costs a lot more than it did a year ago. And used cars are still fetching premium pricing.

Now, despite the inflation report, the White House is sticking to their promises of easing prices this year, the president saying in the statement that this report really underscores that we still have more work to do, with price increases still too high and squeezing family budgets.

And despite the White House trying to calm household concerns, our latest FOX Business poll shows that more than a third of Americans are worried about higher prices. In fact, it's the overwhelming top issue for respondents, who say it's the number one issue affecting the economy right now.

Government spending, income inequality and supply chain issues came way behind in this list. Also, inflation is forcing the Federal Reserve to take action, Wall Street now forecasting three interest rate increases this year, but the latest data also from the Central Bank showed that economic growth moderated, slowed down in the final three months of last year.

So, as you see, Charles, it's really a tough balancing act for Jerome Powell and the Central Bank right now.

PAYNE: Absolutely.

Susan, stay with us.

I want to bring in market watcher Kenny Polcari.

And, Kenny, just tell us, how much worse is it going to get from here?

KENNY POLCARI, SLATESTONE WEALTH: Listen, I think people have to be prepared, the way Susan said.

I think prices are going to continue to surge. I think it's going to get more difficult. We have been talking about this, and I have been talking about this in my note, that it brings us right back to the late '70s, early '80s. Now, interest rates aren't that high yet.

But I think people have to get ready for this continued surge in inflation, because it's not going to come down right away. There's this momentum to it. And as much as the momentum goes, it's going to take a while before they can slow it down, and then get it to go in reverse.

So I think it's here -- you know, I think it's here all through 2022. And I don't think we see any relief until early 2023.

PAYNE: Yes, Kenny, there's two parts of the story.

And, Susan, I will bring you in on this as well, right? They call part of a sticky. Part of it as flexible. And I think it's that one part that, that sort of flexible part, particularly wages.

We're in this crazy wage spiral. You have got a workers strike; 4.5 million people quit the labor force in November, and for a variety of reasons. They say they don't want to come back. They have got some money saved up. And so the companies have to raise their wages. When they raise their wages, they have to raise prices.

So here's the ironic thing. We learned today that real wages went down 2.4 percent. So, here, people are thinking they're getting more money, but they can't -- it won't go as far.

This is sort of a death spiral, isn't it, Kenny?

POLCARI: It's exactly the wage price spiral that we saw in the early '80s, right, at that late '70s, early '80s. And that's exactly -- I have been talking about it.

Some people thought I was out of my mind. They said, you don't understand. It's a different world. It's not. And look what we're seeing. We're seeing exactly that wage price spiral. And I think that's what people are going to have to get used to.

And the fact that today's number actually showed that wages went down, but yet prices are still going up, is even more of a problem.

PAYNE: Yes.

POLCARI: Because then workers are going to go in and demand even bigger wage hikes, which is going to cause bigger price hikes, and then you're stuck in that circular argument, right, wage-price spiral.

PAYNE: Susan, this takes us back to 1982. There were some real serious actions taken back there by then Fed Chairman Paul Volcker. You also had Ronald Reagan.

LI: Yes.

PAYNE: And between them, they did some things that people wonder if you can do anymore.

And, essentially, they broke the back -- really, the recession hurt everyone, but the remedy for a moment hurt everyone as well. Do you think there's a political will there to have the stock market come down a whole lot, to have people suffer a few more months to sort of come out of this?

Could the Federal Reserve go that route?

LI: Well, I will tell you this, because, if Jay Powell had his way at the Federal Reserve, he probably doesn't want to be raising interest rates, and definitely not three times this year, which is anticipated by Wall Street.

You still have four million less jobs now than you did before the pandemic. Now, you brought up 1982 ,Charles. I will say this, because stock markets tend to price out what happens in six to nine months. And back in 1982, you had a pretty strong stock market, despite rising rates.

And you have seen that five of the six times -- in the six times that we have seen rates go up. So, some are anticipating look, three interest rate increases, pretty much what we expected this year. And that's why you saw stock markets aren't really moving in reaction to the inflation numbers.

PAYNE: Kenny?

POLCARI: Well, I got to jump in there, because I was actually 20 years old on the floor of the New York Stock Exchange in August of 1982, when the Dow was trading...

(CROSSTALK)

LI: Well, I wasn't around back then, OK, Kenny?

(LAUGHTER)

LI: That was too long ago for me.

POLCARI: OK. No, OK, but so I'm putting myself out there, telling everyone I'm 60 years old, yes.

But I was 20 when it happened. And the Dow was trading at 792 on the day that Paul Volcker, Tuesday, August 17, 1982, the day that Paul Volcker came out and made that announcement, when interest rates were 21 percent. And they came out to break the back of unemployment, break the back of inflation, break the back of the economy, and they reduced rates by 10 percentage points -- 10 percent, which was 2 percentage points.

It was a massive move, which was the birth of the greatest bull market that we saw on Tuesday, August 17.

PAYNE: Right.

POLCARI: And that was the beginning of then what we saw, this 25-year raging bull market, which is the greatest place to be.

But prior to that date, the market was kind of struggling.

PAYNE: Susan, I got 30 seconds, but there's also this wealth effect that includes a housing boom and other things.

So, the Fed does have to walk down a delicate balancing act, don't they?

LI: Absolutely.

And, as you mentioned, we talked about record prices for homes. And now I would say that sales are moderating, because there isn't the right-priced supply out there. But there's still a lot of jobs around. We talked about 11 million job openings, the quits rate. You don't quit in a bad economy.

So that's the good part for consumers and Americans out there.

PAYNE: Yes.

Well, here's the good news too. Back then, the number one song was "Ebony and Ivory." So maybe at least we will get some good music out of this thing.

(LAUGHTER)

LI: Was that Michael Jackson?

(LAUGHTER)

PAYNE: Yes, thank...

(LAUGHTER)

PAYNE: Thank you both very, very much.

POLCARI: Thank you, Charles.

PAYNE: Of course, it's not just prices that are taking off, right? Americans are dealing with massive shortages.

Take a look. This is the scene in Washington, D.C., this week. Now, these are shelves normally stocked with everyday items. They're stripped bare. It's a scene that's being repeated across this country.

Rich Edson is in Washington, D.C., with that side of the story -- Rich.

RICH EDSON, FOX NEWS CORRESPONDENT: Yes, good afternoon, Charles.

And if you're looking for milk, meat or salad, you may have to go somewhere else. At least the selection isn't what it usually is around here. The rest of the store is pretty good. Giant tells us that they have had issues when it comes to weather. And they have also had problems when it comes to the COVID-19 surge.

They're not alone in this. There are a number of grocery stores around the country and around the D.C. area that have had issues, especially in the beginning of the week. This is the scene, according to people who were posting on Twitter sharing their photos, of empty shelves around the D.C. area.

Now, we walked into a D.C. grocery store on Friday night. They were out of eggs, they were out of salad, a number of different things. The staff then told us that they had major weather problems in the Northeast and that they would be getting their truck and a couple of days later. Everything worked itself out.

So, FMI, it's a trade group representing grocery stores and food suppliers. They told us that this is the situation. There's: "A combination of several factors, from labor and transportation shortages, to recent extreme weather events, continues to impact the movement of food through the supply chain. These issues can be difficult for grocery stores to predict, as they're often regional and inconsistent," issues that are leaving shoppers to take multiple trips to the store.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Honestly, it looks like March of 2020, when everybody was stockpiling and the shelves were bare.

UNIDENTIFIED MALE: It's like a Soviet store during 1981. Horrible.

UNIDENTIFIED MALE: Everything, meat, egg, dairy. Certain brands were out, most vegetables. It was all fresh items.

UNIDENTIFIED FEMALE: I have been to a few grocery stores for a few days, and a lot of the stores have been down like this.

(END VIDEO CLIP)

EDSON: Now, FMI, that grocery trade group, says that there is a healthy supply of food in the system. They're just trying to work it on through.

There's also Consumer Brands Association. They say that grocery stores are typically out of anywhere from 5 to 10 percent of their brands in stores. And then right now, specifically when it comes to food, they're up around 15 percent. As D.C. starts to dig out from that issues that have to go with the snowstorm, stores are returning to somewhat normal, but there's still those Omicron issues and transportation issues that continue to dog the system -- Charles, back to you.

PAYNE: Rich, thank you very much.

So, is this all about to get worse? My next guest actually thinks so, especially, as Rich mentioned, that the Omicron-related disruptions start to hit the Midwest.

Geoff Freeman is the president and CEO of Consumer Brands Association.

Geoff, thanks for joining us.

Lay out the possible scenarios, beginning with the most likely from here.

GEOFF FREEMAN, PRESIDENT AND CEO, CONSUMER BRANDS ASSOCIATION: Well, Charles, it's great to be with you.

I think we have got the perfect storm right now. We have got the labor shortage, which we have had throughout this pandemic. We're up to 120,000 workers short within the consumer packaged goods industry.

We have obviously got issues with demand. Consumer demand is off the charts, more people staying at home, fewer kids in school, unfortunately, fewer people in offices and traveling around the country, which means that demand is in the grocery stores.

And then we have got this winter weather. All those things are combining to create this situation. And it doesn't help us that we have got a shortage of good, clear communication coming from the administration when it comes to how to manage Omicron right now.

We're losing too many people on the front lines because of issues around quarantining, issues around what happens with asymptomatic people. We don't have the clear communication we need to keep people on the front lines when they're healthy enough to do so.

PAYNE: Yes, certainly, the -- ultimately, the default has been, OK, I just better stay home.

And when a truck driver says that or someone in your industry says that, that means that maybe a family won't get that meal that they that they go to the supermarket searching for.

What does it -- when do you think we should get the all-clear? When should the administration be at least clearer on these things, particularly when we're talking about this massive system? And we have all seen the photographs of these ships outside the ports of Los Angeles and Long Beach.

It's integrated. It's an intricate system. And at the very least, we would -- we need to be able to move these trucks, these -- the ports that -- all the intermodal packaging and all of that. When should we get there all- clear from the administration, hey, let's get this thing moving?

FREEMAN: I'm not a health expert. I will leave that to those.

But what we could use from the administration is clear communication. How should we handle people right now who have the Omicron virus? How quickly can they get back into the work force? What do we do? Obviously, to get back in the work force, you need tests. We don't have enough tests right now.

How do we prioritize the essential work force to have access to those tests? We don't do that right now. If we want to keep food on the shelves, if we want to keep these places stocked, we need to make sure that truckers can stay on the road, that people can come into manufacturing facilities. We need to be rushing tests to these essential workers to do that.

We need to look at states and localities that are now contradicting those areas where we have seen some progress with CDC. CDC limited the quarantine time from 10 days to five days. But we have still got states out there. Washington state, for example, they're maintaining the 10 days.

That's a great way to ensure that these shortages continue.

PAYNE: There's been a shortage of truck drivers for a long time. There's been a desperate plea out there.

And a lot of folks say the genesis of that is sort of this public opinion, hey, that's not the kind of job that you want, also that there's not the sort of proper training for it. How do we get to the core of some of these issues? That's an amazingly great-paying -- those are great-paying jobs.

And I'm sure a lot of Americans, if they knew more and they had the training, Geoff, they would want to take those jobs.

FREEMAN: Well, you're right, Charles. And we're 80,000 truck drivers short right now of where we need to be.

But I will give you another angle of this. Sometimes, it doesn't take more drivers; 40 percent of the trucks on the road are driving around empty. They're driving around empty because they're doing what's called backhaul, dropping something off, and going somewhere else to pick something up.

If we could have those trucks full, we would address a lot of the capacity issues that are in the system right now. But we can only do that if we have some type of bird's-eye view at the federal level, if we begin to understand and use some type of ground traffic control system, just like we do with an air traffic control system, to empower trucking companies, to empower people who want to ship goods with information on where that closest truck is.

There's ways the government could be helpful. This labor shortage is affecting all aspects of our economy. For too long, we haven't paid attention to supply chain. And, today, we're rearing the results of that.

PAYNE: From your vantage point, and everyone's playing this guessing game, how much longer does this go on?

FREEMAN: As you said, it is a guessing game.

I think we're all optimistic that, when we get on the other side of Omicron, we're going to be in much better shape. I will say this about the -- we see these images on the screen of empty shelves. The food, beverage, household product, personal care industry for two years have delivered for the American people.

They will continue to deliver for the American people. The question is, how disruptive are these waves going to be? I don't know what the virus is going to do. But I know that, with more clear communication from government, better cooperation at the federal -- from the federal level, the state level, we can, I think,nip in the bud some of these problems that we shouldn't be seeing two years into this.

Testing is a great example of that. Let's get testing to the essential work force. And we have the -- if the waves come, the waves come, but we're able to keep people on the front lines.

PAYNE: Before I let you go, Geoff, one the actions that we have seen from the administration, particularly President Biden, has been to point fingers at these industries. He's taken on the beef industry. He says we should be making more cars, essentially saying that it's competition, that it's business greed.

Do you sense there's sort of so some sort of overwhelming greed factor, and that's why shelves are empty, that's why people can't buy the things they would normally buy?

FREEMAN: Yes, I have had the pleasure over the past two years of working with the people of the consumer packaged goods industry, and seeing firsthand the lengths they have gone to, to deliver for the American people, to see the folks who, at the height of the pandemic, March and April of 2020, when many people were sitting at home, they were going into work every single day, and putting themselves at risk in some instances in doing that.

These people are committed. They have been providing for the American people, again, 300-plus million people every single day. We couldn't be prouder of what they have done. And I think they're committed to continuing to do that. We need government as a partner if we're going to succeed.

PAYNE: I got to tell you, Geoff, I agree with you 100 percent.

We're going to go now -- we will talk to you again. Thank you very much for your expertise.

Let's go to the White House, the briefing under way.

(JOINED IN PROGRESS)

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: ... turn it over to Brian Deese.

BRIAN DEESE, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Thanks, Jen.

Good to be with you all today. I, just at the top, wanted to make a couple of points about -- of context on our current economic situation, and then happy to take questions that you have.

So, four quick points. First is the context on our economic recovery. We've learned, based on data that we received over the last several days, that, in 2021, our economy experienced the largest single drop in the unemployment rate on record in the history of the country, down to 3. 9 percent; the most jobs created in any year on record at 6. 4 million; the strongest economic growth of any year in nearly four decades, coming in between 5. 6 -- 5 and 6 percent over the course of 2021, in all likelihood; and real household income -- that is taking into account price increases -- increased in 2021.

So, just to repeat that context: the largest decline in unemployment, the most jobs created, and the strongest economic growth in nearly 40 years.

The second point is we got December price data today. And I would note that we saw a welcome deceleration in the rate of price increases in a number of respects.

In the headline -- price increase data -- we saw a decline month to month to 0.5 percent, down from 0.8 percent in the month before. It's still too high, but moving in the right direction.

As I think I say every time here -- and if I don't, I -- it's a mistake -- we never index too heavily on any individual one month of data in any direction. But I would note that we saw, in prices from November to December, a decline in the rate of growth of the prices for food at home, which is a technical way of saying food that people buy in the grocery store. And we saw a drop in the price of energy, both at the gas pump but also natural gas and winter heating costs.

And many of you focused on the annual 7 percent rate. If we are trying to look at where we are headed, the month-to-month changes are more instructive. And most independent forecasters continue to project that we will see moderation in price increases over the course of 2022.

Third point is the global context for this data, both on prices and on economic growth writ large. What we're seeing right now is these price increases are a global phenomenon, and that reflects the nature of the global challenge of coming through a pandemic crisis and a pandemic- affected recovery.

Over the past six months, price increases in the United States and Europe have basically run neck and neck. In December, the E.U. saw its highest recorded inflation in -- on record. Germany saw its highest inflation, in December, since reunification. And so, while there are differences country by country, this is a global phenomenon and driven by these global issues.

Which comes to the fourth point, which is: Given the unique strength of the United States economic recovery -- overall growth, as well as the labor market -- we are well positioned to attack the challenges of prices and costs head on. And that's exactly what the President and this administration are doing. And it's his principal focus when it comes to the economy.

As he laid out on Friday, his approach to attacking prices and costs are grounded in the -- in the premise that the right way to do this is to build on the economic successes that we have seen, not to abandon them.

And that really means, with respect to what we in the administration and Congress can do, is to focus on how we can expand the productive capacity of the economy; how we can make sure that our economy can produce more goods and services more cheaply and easily across the country; get more people working; and get to the strong, sustainable growth that we are beginning to see -- and if we can address these present challenges, we'll hopefully see going forward.

The President has outlined a very specific three-part plan to do that around unsticking supply chains, protecting consumers, and promoting competition and trying to actually reduce directly some of the most significant costs that Americans' families face. And obviously, key elements of the Build Back Better framework go directly at that issue. So, I'm happy to talk about the policy details behind that plan in general.

But I think, just to summarize: We have a historically strong economic growth and labor market outcomes. We have -- saw some welcomed deceleration, but price increases that are still too high; decidedly a global phenomenon happening everywhere, but we in the United States are uniquely well positioned that -- against that challenge. And that's -- that's the President's focus.

PSAKI: All right. Jeff.

QUESTION: Brian, thanks for coming today. The White House and other economists, last spring and fall, were talking about inflation being transitory. And I think at least the expectation when we were talking about it last spring was that it was going to be well taken care of by now. What did you get wrong? What did economists writ large get wrong? And how should Americans -- why should Americans be confident when you say prices are going to get better later this year?

DEESE: So, I think that if we look at the situation earlier in the year, a number of projections and forecasts have come out differently than we anticipated. If you -- if you look at employment, for example, virtually nobody was projecting that we would see unemployment fall as quickly as it -- as it has and get to 3. 9 percent by the end of this year. That's four years faster than the median forecast.

And so, I think we've seen a number of unanticipated outcomes.

When it comes to prices, what we have -- what we have said consistently -- focused consistently is that this is a global phenomenon; it is connected to the pandemic and the issues that that has raised. Certainly the supply chain challenges that have evolved over the course of time, through the Delta variant and over the course of the fall, have been issues that we've had to go and tackle head on.

But I think that the -- nomenclature aside, we find ourselves in a position now where we're looking forward, and most forecasters are projecting that the price increases will moderate. Our focus here is looking at what are the concrete, practical steps that we can take to try to help ensure that outcome and try to help accelerate relief where we can -- where we appropriately can.

So, when it comes to something like the supply chain challenges, those manifested more significantly than people were anticipating over the course of the summer and early fall, both because of COVID factors but also buying behavior of major retailers and major freight movers. And so, we went into action over the course of the fall to try to help address those issues and the bottlenecking we were seeing at ports. Made very significant progress on that -- a 40 percent decline in the amount of time that a container is sitting at the dock.

And at the same time, we still have work to do on that front, which is why, even this month, we're going to take additional steps with ports across the country to set up inland locations to move products and impose new fees on empty containers that are sitting idle at our ports.

So, we're going to -- we're going to stay at that and other issues. And we believe that that's the best way that we can, again, help to expand the economy's capacity to deliver goods and services to the American people.

QUESTION: But is it the supply chain then, essentially, that is the reason for the incorrect forecasts 10 months ago?

DEESE: Look, I think that we are -- our focus now is on assessing where we are and trying to address the issues in front of us in an effort to try to accelerate the course -- the course of the recovery.

As I said, there's lots of -- this has been a unique year on a lot of accounts. And so we find ourselves in a uniquely strong economic position on a number of counts, and we've got price increases that we need to -- we need to tackle, and that's our focus.

PSAKI: Weijia.

QUESTION: Thank you, Jen. And thank you, Brian, for being here. I have a quick question on some of the practical matters that you've talked about.

Are you taking any steps to help people afford food? Despite the figure that you mentioned -- that, month to month, the prices have gone down -- my colleagues are reporting about how people are finding shortages on the shelves, how the stuff that is there is more expensive. Is there anything you can do to help families pay for that food?

DEESE: Well, I would say a number of things. One is, when the President came into office, he prioritized early passing the American Rescue Plan. The American Rescue Plan has historic investments in actually addressing food insecurity for people who couldn't afford food. As a result, we saw hunger in the United States decline in 2021.

It also included a -- the Child Tax Credit -- another resource that went directly -- that are going directly to families to help address the typical costs that they face on a monthly basis. And, as a result, we saw child poverty fall by 35 to 40 percent in America over the course of 2021.

And we saw -- as I mentioned, we saw some welcome deceleration in the increase in the cost of food this month.

And we're going to keep focused on those ways that we can address the typical pocketbook issues that the American people face. And this is one of the issues why the core economic logic behind the President's -- behind the Build Back Better plan is important in this context, because for working Americans who are -- who are benefiting from a strong labor market and more job opportunities but also struggling with costs not only of food but costs of childcare or cost of health care, the components of the Build Back Better plan would directly address those issues by putting -- by providing a tax cut to families directly in their pocketbook, and then reducing other of their most salient costs.

So, for a lot of the families that you're talking about, if they only had to pay 7 percent of their income in childcare, that would free up a lot of resources to invest in other monthly needs. So...

QUESTION: But in short of that passing and separate from what you have already done -- the measures you mentioned -- is there anything new you can do to help the food situation?

DEESE: Well, I would say, first, what we have done is historic and has made a big difference. Number two, our central economic legislative priority is getting those elements of Build Back Better in place. And part of the urgency of that is to address precisely the challenges that you are identifying.

So -- and beyond that, we are looking at ways that we can unstick elements of the supply chain that may be getting in the way of, for example, physical product getting to market.

And certainly we have seen -- we have seen -- over the course of this fall, we've seen concerns about product shortages in particular categories and otherwise. What we see overall, if you look at retail inventories, including grocery store inventories, they're actually higher now than they were pre-pandemic -- so, in a pretty healthy place. But that doesn't mean that there's logistical challenges at bottlenecks that may be localized.

And to the degree that we can work with private sector companies and help ease the challenges in their private sector supply chains, certainly we will -- we'll remain open to doing that.

QUESTION: And I do have one question on the global challenge, since you mentioned it, the President mentioned it today. Can you talk about how much you believe China's latest round of lockdowns and its zero-case doctrine is having an impact on inflation since, obviously, it's impacting the global manufacturing?

And has the administration had any conversations with China about the factory workers, about the lockdowns?

DEESE: So, there's no question that the global nature of the pandemic affects global supply chains and has affected the flow of goods across economies.

One of the things that we did earlier this fall was actually set up what we call an early warning system, working with a number of our American companies that rely on sourcing input components or products from Southeast Asian countries to identify where there might be COVID outbreaks in those countries, and work with the State Department and USAID and the CDC on the ground in those countries to do what we can to actually help to stabilize the situation and reduce the potential impact of a shutdown or a lockdown or otherwise.

With respect to China specifically and the current moment, we're monitoring it very closely. As we assess the issue today, the lockdowns are most likely to have the effect isolated in China because the production facilities in those geographies are principally suppliers to the Chinese market.

But the situation is fluid and ongoing. It's something that we're monitoring in real-time and working across the interagency, including the State Department and the CDC, to try to keep a handle on.

PSAKI: Peter?

QUESTION: Brian, respecting that you said that prices are expected to moderate in the months ahead, Americans right now, at the start of 2022, are setting their budgets; they're trying to figure out how much things are going to cost them for themselves and for their families. How much longer should Americans expect that they'll be paying these inflated prices?

DEESE: So what I can say is that, in the context of a strong economy, most independent forecasters expect these prices to moderate over the course of 2022. And that's consistent with the administration's view.

And you have a President and an administration that's waking up every day and thinking about the practical actions we can take to try to help accelerate that, protecting -- unsticking supply chains, protecting consumers -- make sure that consumers aren't being taken advantage of in a moment of uncertainty.

QUESTION: So, for clarity, that means by the end of '22 it's moderated, or we're kind of back to where we were before this, by those projections?

DEESE: Well, if you look at -- if you look at the projections by independent forecasters, then you see moderation over the course of '22. And you get back to -- you get back to levels that are closer to pre- pandemic normal.

But I think that in the -- in the short term, in the immediate term, I think there -- we'll focus on the practical steps that we can take; focus - - working with Congress, encouraging Congress to take practical steps that would have real, concrete impact for those families in their lives right now; and delivering in practical, concrete ways.

And I think that, as we have seen with what we were able to get done in 2021 to deliver that type of relief directly to families, that can make all the difference. And that can really help to bridge this gap for families and also help to get more people to work, that we continue to face real challenges where parents and other caregivers in this economy want to get back to work but are held back because of the cost of actually finding a quality way to take care of a kid or take care of an elderly parent -- that's compounded by the pandemic.

And us acting now to help address those costs for families would not only provide some peace of mind to those families. You know, if every American family with kids knew they weren't going to pay more than 7 percent of their income in childcare, that would be a big weight off their shoulders; it also would be a big benefit to the labor market by allowing more people to work as productively as they -- as they choose to.

PAYNE: All right, that's Brian Deese, the National Economic Council director, mostly rehashing a lot of things we have heard from President Biden.

We will continue to monitor the briefing and bringing you any news that comes out of it.

Meanwhile, we have got more COVID confusion, this as cases continued to hit record levels, mixed messages coming from the Biden administration on everything from testing to masking.

FOX News White House correspondent Peter Doocy has the latest on how the administration is responding now -- Peter.

PETER DOOCY, FOX NEWS WHITE HOUSE CORRESPONDENT: And, Charles, very interesting.

About two weeks after the Christmas travel rush, the Biden administration has decided to appoint a COVID testing czar. He is a Johns Hopkins doctor on leave named Thomas Inglesby. And he is saying now that those 500 million free at-home tests the administration has been promising to mail to anybody that wants one still haven't all been ordered yet.

(BEGIN VIDEO CLIP)

DR. TOM INGLESBY, DIRECTOR, JOHNS HOPKINS CENTER FOR HEALTH SECURITY: The contracts are just closing today and the next couple of days. So I think some of the details will be announced by this Friday. But we're going to be getting tests out as quickly as we can, as the manufacturers deliver them.

(END VIDEO CLIP)

DOOCY: The administration has blamed the pandemic for most issues affecting the country, from rising crime to the crimped supply chain.

But the president's focus this week has been on voting rights, way off- base, according to critics, arguing that voters care more about inflation, just like the -- like the just-announced 7 percent increase in prices compared to last December.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO (R-FL): They don't care. You may care about inflation back home. They care about the fact -- their crisis is that there's some laws in this country, for example, some states in this country that do not automatically force everyone to register to vote.

They just automatically register to vote. And that's the crisis.

(END VIDEO CLIP)

DOOCY: So the president's got his hands full with the economy and with COVID.

And he is going to go to Capitol Hill tomorrow to talk to Senate Democrats privately at their meeting, but not about any of this. They're going to talk instead about changing Senate rules so that they can try to jam through voting rights legislation with fewer than the required 60 votes -- Charles.

PAYNE: Peter, thank you very much.

So, could Omicron be actually running out of people to infect?

My next guest says that we could soon see a rapid drop in cases. The Institute for Health Metrics and Evaluation, Dr. Ali Mokdad, joins us now.

We have seen certain countries, starting with South Africa, of course, where the spike goes up, and then it comes down rapidly. And that's starting to play out in other nations as well. How hopeful is that sign? What does it mean, not only with respect to Omicron perhaps fading away, but maybe us getting closer to calling this an endemic, rather than a pandemic?

ALI MOKDAD, INSTITUTE FOR HEALTH METRICS AND EVALUATION: It's very helpful.

We're seeing the same patterns everywhere. And here, right now, at home, we're seeing it coming down in New York, D.C., Florida. So, different states will start coming down at different times. But, as a country, we will start coming down rapidly on the 19th, which is -- means very good for all of us, all of us with ease either be infected or vaccinated, and we should be able to move along.

PAYNE: It's interesting.

It feels like perhaps -- and I'm not sure if you heard my colleague Peter Doocy -- that the White House or maybe we will have those 500 million tests after the fact.

Where do we go as a nation from here? What have we learned, particularly when it comes to isolation, testing, mandates, economic punishment? What have we learned that we need to take with us forward?

MOKDAD: We need to be better prepared.

The example of testing is a good one. We should have had these tests much earlier. That's one. Second, we need to learn that we have to adapt our measures as the virus changes. Right now, we're dealing with a lot of shortage of staff, even at hospitals. And we need to be very flexible and allow people to come back, but they need a test.

And we may have to make the hard decision and send people back to work even if they are still positive. But we need to make sure they are highly protected, so they don't infect their colleagues at work.

PAYNE: Spain, the minister, the health minister and the government of Spain, now pressuring their European counterparts to officially call this an endemic and to create a new normal, if you will, even former folks who were on the Biden COVID task force echoing the same thing.

You have mentioned hard decisions, hard choices. Is that sort of the reality that we should embrace and try to make the best of it?

MOKDAD: Yes, that's a reality we should embrace.

It's moving so fast. It's infecting a lot of people. And we know very well right now it's much milder than what we have seen before. But, still, the sheer number of infections will add a lot of pressure on our hospitals.

But, yes, we are about to go back to our normal lives simply because it's a virus that's spreading, but it's less severe, and everybody will easily be infected or vaccinated.

PAYNE: I know the work is still being done.

Also, though, I have read in several publications where perhaps this variant now is also mitigating the deadlier variants like the Delta, pushing them out of the way, so to speak. Is that happening as well?

MOKDAD: Yes, that's very true.

We are so -- and there is nothing good about COVID-19.

PAYNE: Sure.

MOKDAD: But the fact that Omicron took over Delta, and it's less severe, and it's spreading so fast is, basically, we will not have the same number of mortality or deaths that we were expecting, given Delta was circulating at that time with Omicron.

But, of course, we will have more hospitalization in the days ahead.

PAYNE: Dr. Mokdad, thank you very much. Appreciate it.

MOKDAD: Thank you.

PAYNE: Well, a new report on thousands of migrants released into the United States and now failing to report to ICE. So, where are they now?

Former Homeland Security Secretary Chad Wolf is coming up.

But, first, Bill Melugin is at the border with more -- Bill.

BILL MELUGIN, FOX NEWS CORRESPONDENT: Charles, four sex offenders arrested in just a span of 48 hours here in the RGV, plus a human smuggling bust you're going to have to see to believe.

Both those stories and much more coming up after the break.

(COMMERCIAL BREAK)

PAYNE: Newly released DHS data revealing that over 47,000 migrants who were released in the United States between March and August with a notice to report to ICE failed to check in.

Now officials appear to have trouble tracking them.

FOX News correspondent Bill Melugin is La Joya, Texas, with the very latest -- Bill.

MELUGIN: Hey, Charles. Good afternoon to you.

These numbers are pretty stunning and they're very likely to crank up some of the criticism of the Biden administration and their catch-and-release policy.

So, we can pull up some video right here that we shot here in La Joya yesterday of migrants arriving and smiling and waving to our cameras. Well, explain the background on all this. Back in March, when the border crisis really first exploded, the Biden administration started mass-releasing migrants with what are called NTRs. That stands for notice to report.

And what those are is a request to please turn yourself into an ICE office in a city of your choosing within 60 days. And now, for the very first time, we got some brand-new DHS data that shows how few of those migrants actually did that. If we can pull this graphic up right now, again, brand- new from DHS, what those numbers show is, between March and August, DHS released about 104,000 illegal immigrants into the country with NTRs, but only about 50,000 of them actually reported to ICE.

More than 47,000, as you mentioned, never showed up to ICE within that 60- day window. And then about 6,600 also did not turn themselves in, but it still was not within that 60-day window at the time this data was compiled.

All that, in a nutshell, essentially shows that about half of those migrants who got NTRs never showed up to an ICE office. And NTRs have since been discontinued entirely.

Meanwhile, take a look at these wild photos out of Laredo, Texas, yesterday. Texas DPS pulling over this truck, and take a look at what they find inside, 27 illegal immigrants being smuggled inside the cab of that vehicle, all of them crammed inside. Texas State Troopers telling me the driver was a U.S. citizen from Houston, who was later arrested and charged with multiple counts of human smuggling.

Also, take a look at this mug shot right here, just here in the Rio Grande Valley Sector, four sex offenders arrested at the border in a span of 48 hours, including this previously deported Mexican national you're looking at. He had previous charges out of the Corpus Christi area for aggravated sexual assault of a child and the continuous sexual abuse of a child.

And then, lastly, want to pull up this photo here from Del Rio Sector. What you're looking at here are multiple unaccompanied minors, just over the weekend, Border Patrol there reporting they picked up more than 70 of these unaccompanied minors, who turned themselves in with no family or with total strangers, many of them telling agents they have no idea where their parents are.

And then back out here live, more on Del Rio Sector. Migrants continue to come in from all around the world. Agents there saying just this last week they got more than 30 from Uzbekistan, four from Tajikistan, one from Syria, and one from Mauritania in Northwest Africa.

We will send it back to you.

PAYNE: Bill Melugin, thank you very much.

So, let's get the read on this now from former acting Homeland Security Secretary, Heritage Foundation visiting fellow Chad Wolf.

Chad, I mean, we continue to hear these numbers and these stories over and over again. And here's the thing. They continue to amaze. They continue to be mind-boggling that you would let someone go and say, by the way, come back later and show up for a hearing.

I'm almost shocked that half did, to be quite frank with you. This NTR program apparently did not -- it's been discontinued, but who thought this would work in the first place?

CHAD WOLF, FORMER ACTING U.S. SECRETARY OF HOMELAND SECURITY: Well, it's essentially the honor system, right?

They're asking migrants to show up at a local ICE office. But there's no way to actually track that. So there's no way to know where they are. And, look, the reason why they did it, if you recall, back in March, April, May, and June, it's because they were overwhelmed at the border, because they had -- throughout the campaign and throughout all their policies since they took over, they have been encouraging migrants to come to the border to claim asylum, knowing that the majority of those are false claims.

And so it's no surprise that they got overwhelmed. And by getting overwhelmed, they couldn't do the proper paperwork to issue notice to appears, instead, notices to report. And, again, it's essentially the honor system.

So, to have 50,000, again, that's just through August. I think we need to keep in mind the Haitians that we saw in Del Rio, that was in September. I can guarantee you the majority of those were also issued notice to reports as well.

So, that number, 50,000, 47,000, 48,000, is probably much higher, as you go all the way through the end of 2021.

PAYNE: Right.

We're talking about the messaging through the -- during the election, which was essentially, hey, come on up, red carpet, green light, come on up, we have got vacancies. Since -- in recent weeks, we have got New York City, on the verge of allowing hundreds of thousands of undocumented migrants vote, and now the governor in California promising economic benefits as well.

How do you stem, how do you ever control your border, any country, any nation in the world when, once you get through, you know that you -- the honor system, you will never have to report back, you will be able to vote, and you will also have economic gains?

I mean, really, it's -- I'm asking because we have got a lot of citizens in this country who -- we're the greatest country in the world. We have got the kindness hearts in the world. We're the most generous. We have lost blood, we have lost treasures, we have spent trillions to help everyone around the planet.

But shouldn't we do -- be smarter with respect to an organized way of allowing folks into this nation? This seems like they're going to create a free-for-all

WOLF: Well, it is creating a free-for-all.

And I think that's why you see the worst border crisis that we have seen ever, certainly in our lifetimes, but really ever. And I think the United States continues to be one of the most generous and welcoming countries around the world. But there is a legal way. There's an orderly way. And there's process to get into the country legally.

But when you discard that, and when you're the Biden administration, and you put forth a set of policies and messaging that encourages illegal behavior to come across, you end up with what you have today, which is a colossal failure of a border security and immigration enforcement strategy.

And I think that's what's leading -- I think a lot of people are scratching their heads and saying, what is going on?

PAYNE: Yes. Yes.

WOLF: It's not only the migrants, but it's national security threats that are coming to that border as well.

PAYNE: Yes, I mean, people from every single country in the world.

Chad Wolf, thank you very much.

PAYNE: So, with Americans facing massive price spikes and COVID spikes, why is the president focusing on voting rights right now?

We're going to debate that right after this.

(COMMERCIAL BREAK)

PAYNE: So, as the administration faces mounting threats from Omicron, inflation, and other crises, President Biden now trying to shift the focus to voting rights.

He will be meeting with Democrats tomorrow to discuss their push to change the filibuster and pass election reform.

Aishah Hasnie is on Capitol Hill with the latest -- Aishah.

AISHAH HASNIE, FOX NEWS CORRESPONDENT: Hey, Charles.

Well, today, Minority Leader Mitch McConnell really ripped into President Biden, saying that he doesn't recognize the man anymore and really ripped into the speech that he gave in Georgia yesterday. Take a listen.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY): Look, I have known, liked and personally respected Joe Biden for many years. I did not recognize the man at the podium yesterday.

The president's rant, rant yesterday was incoherent, incorrect, and beneath his office.

(END VIDEO CLIP)

HASNIE: So, Republicans are angry, but Democrats have their own problems, Charles.

Clearly, the president's big Georgia speech did not move the needle at all. So, now he's headed to the hill tomorrow to lunch with his caucus. He's done this before with Build Back Better. And you might remember how that worked out for him.

So the votes are just not there to change the filibuster threshold.. First of all, you have got moderates up for reelection in purple states, like Jon Tester, Mark Kelly, Jeanne Shaheen, who may not go for this carve-out.

And then there are Senators Kyrsten Sinema and Joe Manchin, who are still very much against this.

(BEGIN VIDEO CLIP)

QUESTION: He said, when it comes to a majority rule in the country, a majority should rule in the Senate. Do you agree with that?

UNIDENTIFIED FEMALE: Thank you.

(CROSSTALK)

SEN. JOE MANCHIN (D-WV): Well, he understands. We all understand how the Senate works.

(END VIDEO CLIP)

HASNIE: "We all understand how the Senate works," he said.

So, meantime, Leader Schumer insists he's almost there with the votes. And he's not shy about the pressure campaign Democrats have going on right now.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D-NY): Every single one of the 50 is talking individually to Joe Manchin, to Kyrsten Sinema. And they're saying things like: I will lose my election if the legislature is allowed to do this in my state. We will lose our majority.

(END VIDEO CLIP)

HASNIE: So, Charles, right now, Schumer is still strategizing on how to bring this to the floor.

Some Democrats think that they are going to be working through the weekend, and we might see something happen on Monday, by their deadline -- Charles.

PAYNE: All right, Aishah, thank you very much.

So, sky-high inflation, COVID confusion, and the White House talking about voting rights.

Let's...

(BEGIN VIDEO CLIP)

SEN. JOHN CORNYN (R-TX): They' willing to say and do anything to get what they want. But, thankfully, members of their own party are not on board. They're not going to succeed.

This is going to be another example of President Biden and his party overpromising and underdelivering.

(END VIDEO CLIP)

PAYNE: That was Republican Senator John Cornyn telling me Democrats won't be able to use voting rights to distract Americans from the real issues.

Let's see what our panel has to say, RealClearPolitics' Phil Wegmann and Democratic strategist Laura Fink.

Laura, it still feels like a lot of arm-twisting. Is this the hill to die on, when all these other major issues are really resonating a lot more in this country?

LAURA FINK, DEMOCRATIC STRATEGIST: Well, I think that we have to be able to focus on more than one thing.

And I think voting rights and small-D democracy -- certainly, Republicans are focusing on voter restrictions in 19 states, more than 33 bills passed, and more are on deck to restrict Americans' access to the ballot.

That impacts everything, every item you just discussed, Charles. And, frankly, the only person that could distract from some of those woes might be those Georgia Bulldogs. So this is really central to all Americans' right to access the ballot and to be able to vote in free and fair elections.

PAYNE: Right. Right.

Phil, one thing I want to make clear to the audience, the Voting Rights Act of 1965 has been extended, amended and extended several times, including in 2006 most recently for another 25 years.

FINK: Yes, got it.

PAYNE: Voting rights, the voting rights of people, including Black people in America, are not being threatened.

This is to usurp Supreme Court rulings that did not go their way. And, essentially, Phil, I think it's going to give us bigger, more intrusive, omnipotent government. Your thoughts?

PHILIP WEGMANN, REALCLEARPOLITICS: Well, I think you laid out the conservative case pretty well there.

What's interesting and what we heard from Aishah just a moment ago is that the political arithmetic hasn't changed in the Senate. So the problem that Joe Biden is going to run into in 2022 is the same problem he had in 2021, which is that he doesn't have the votes.

And so the difference, though, is that this is not just a disagreement over how much money to spend, over dollars and cents in Build Back Better. The difference, and we heard the president lay it out yesterday, is that he said, essentially, that if you do not support this carve-out, that you are on the wrong side of history, that you're on the side of Bull Connor, Jefferson Davis, and some other unsavory characters.

PAYNE: Right. Right.

WEGMANN: That's going to be a difficult pill not for Republicans to swallow. They're going to dismiss that rhetoric out of hand. That's going to be difficult for some moderates, like Sinema or Manchin or the others that Aishah mentioned at the top.

PAYNE: Right.

WEGMANN: I think it would likely be tough sledding.

PAYNE: And, Laura, is that fair now?

I mean, is -- really, if you don't go this way, you're racist?

FINK: Well, let's talk about the history, Charles.

And you mentioned the Voting Rights Act and preclearance, a critical point.

PAYNE: No, we only have a minute to go.

If people don't -- if people -- if Democrats...

FINK: Well, then -- you can use it. Go ahead.

PAYNE: ... don't go along with President Biden, are they racist?

FINK: Go ahead. I won't talk.

(CROSSTALK)

PAYNE: Is Senator Manchin a racist if he doesn't go along with this?

FINK: I'm not calling anybody a racist.

I'm saying that you are in line with people that restricted the access to vote with poll taxes.

(CROSSTALK)

PAYNE: There are no restrictions to voting.

FINK: Really? Closing polling stations?

PAYNE: The Voting Rights Act of 1965 was extended in 2006 for 25 more years.

FINK: Wait. I'm sorry. Closing polling stations, closing Souls to the Polls, making it a felony if you turn in an extra ballot that's absentee...

PAYNE: Yes.

FINK: ... restricting absentee access, restricting drop boxes...

PAYNE: Listen, we have got 20 seconds.

FINK: ... specifically in counties with a majority of black residents?

PAYNE: We're going to have to pick this up. We're going to have to pick this conversation up.

(CROSSTALK)

PAYNE: The Voting Rights Act of 1965 is alive and well. And a lot of people voted. And that's why President Biden is in the White House today.

This is a specious argument. If you want to talk about big government, talk about big government.

Now "THE FIVE" is next.

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