In now to some encouraging news on the economy. Wall Street taking off and reaching a new record after the Fed signaled the cost of borrowing may soon be coming down. Abc's Alexis Christopherous is here to break it all down for us. Alexis, good morning.

Good morning, Whit. Wall Street got an early Christmas present this week, courtesy of the Federal Reserve. The Fed admitting its efforts to tamp down inflation are starting to pay off, and signaled three interest rate cuts could be coming in 2024. Now, that would make borrowing less expensive by lowering interest rates on things like credit cards, auto loans, and mortgage rates, which by the way have been falling in recent weeks, dipping below seven % this week for the first time since August. The Fed's news igniting a rally on Wall Street, sending the Dow to an all-time high and its first close above 37,000. For the week, the Dow, S&P 500, and Nasdaq, each gaining more than 2%. Investors now betting the Fed will achieve that soft landing, lowering inflation while avoiding a recession.

Whit. Okay, let's dig in a little bit deeper. Alexis, thank you, and bring in Jared Bernstein, Chair of the US Council of Economic Advisors, who joins us now from the White House. Jared, good morning to you. It's great to have you. The Federal Reserve, as we heard their signaling rate cuts coming next year. The stock market is responding with record highs. How confident are you now that the US will, in fact, avoid a recession?

Well, look, it's always hard to look around corners in an economy that has uncertainty as part of its characteristics in recent years. However, we've got some really great momentum going here. You reported on the Federal Reserve. That's great. Love to see the stock market do fine, sure. But what President Biden wants to know is, is this reaching middle class families? Is it helping to uplift the families like the one he grew up in where all of these issues were kitchen table issues? And in this case, we also see some positive momentum. We have a job market that, of course, has been strong for a long time. The unemployment rate below 4 % for 22 months running. That is a 50-year record. And that's helping, along with the easing of inflation, critical part of the puzzle, also related to the Fed story, with the easing of inflation, that's helping to generate real wage gains, more purchasing power, wages beating prices, so important for the American consumer.

And you know this, we talked about this balancing act, coming out of this period of inflation. Does the White House expect and do you believe the time is right next year for those interest rates to start coming down?

Well, first of all, when it comes to the Federal Reserve, it's really important to stay out of their knitting. This is something President Biden has been really firm on in contrast to his predecessor. We let them handle monetary policy. We stay out of their way. What the President wants to do is make sure we're delivering on behalf of middle class working families, and that's the plan we're executing on, and that plan is making progress. Now, do we have more work to do? Absolutely. But if you look at prices from TVs to toys, from eggs to apples, airfares, car rental, very important this time of year, and the price of gas. I looked at that before I came out this morning. The price of gas is three dollars and eight cents a gallon this morning nationally. That peaked at over five dollars a gallon back in June of last year. So that's two bucks per gallon of savings. Fill up a tank, and that's the breathing room that this President is fighting for working families.

So you noted that work that still needs to be done. President Biden still struggles in the polls when people are asked about the economy, cost of living, cost of borrowing, everyday items. You mentioned some of those prices come down, but many of those items are still high. His opponents, like Donald Trump, are painting doomsday scenarios if Biden is reelected. So what is your message to voters who blame President Biden in part for the high prices they're paying now?

Well, it's a two-part message. One is, we're on the right path. Got more work to do, but we must stay the course, okay? Inflation is down two-thirds off of its peak. We are bringing back jobs to this country, domestic manufacturing jobs. We are standing up production of clean energy facilities, electric vehicles, electric batteries. And at the same time, there's a headline this morning from one of our major papers. This season's hottest shopping trend, falling prices. That's the direction we're going in. So that's part one, on the right path, more work to do, stay on the path. Part two, contrast that with the plans of the other side. From what we can tell, the plans of the Republicans look to us like they are to cut more taxes for millionaires and billionaires to actually give Big Pharma the presence that Joe Biden has helped to take away so that we can lower prescription drug costs, lower the cost of insulin, lower the cost of health coverage, and make it easier for millionaires and billionaires to evade taxes with the IRS. None of that is okay with this because none of that helps working families. That's his agenda.

That's what we're executing on. More to do, but on the right path.

All right, Jared Bernstein, we're going to have to leave it there. Thank you for your time this morning. We do appreciate it.

Hi, everyone. George Stephanopoulos here. Thanks for checking out the ABC News YouTube channel. If you'd like to get more videos, show highlights, and watch live event coverage, click on the right over here to subscribe to our channel. Don't forget to download the ABC News app for breaking news alerts. Thanks for watching.