Lael Brainard, the former vice chair of the Federal Reserve and current director of the National Economic Council, spoke at a Detroit Economic Club event Monday and discussed the current economic climate and why inflation has remained sticky.

While she acknowledged that inflation has fallen from its 40-year highs, housing and rental prices are still more expensive than what many Americans are comfortable.

Brainard was asked by moderator Glenn Stevens, executive director MichAuto, what her current view of the economy is. Brainard discussed the fact that the unemployment rate is historically low as a sign of strength but acknowledged inflation is still above the Fed's target of 2%.

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She pointed to shelter and housing as one particular area where inflation has remained tricky, but explained how the country may go about tackling that problem moving forward. Brainard said the U.S. needs to build three million new housing units to level out supply and demand, bringing prices lower.

"Housing to be our next big focus, we have tried to get Congress to work with us on low-income house tax credits they are vital," Brainard said. “Unfortunately, that bill would have created another 200,000 units [but] that bill was blocked."

Brainard said the Federal Reserve cutting interest rates by .5% was evidence it is comfortable with the current inflation trends. And while interest rate cuts could lead to lower mortgage rates and increased demand, it also makes it easier for homebuilders to create more homes. 

"Now that the inflation challenge is receding, a more favorable interest rate environment will be good for residential construction," Brainard said.

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