US Treasury Chief Says Inflation Risk “Low” and “Manageable” | Business and economic news
Comments by US Treasury Secretary Janet Yellen follow a $ 1.9 trillion fiscal stimulus package.
Treasury Secretary Janet Yellen said inflation risks in the United States remained limited as the Biden administration injected $ 1.9 trillion in pandemic relief into the economy and a return full employment was in sight.
“Is there a risk of inflation? I think there’s a little risk and I think it’s manageable, ”Yellen said Sunday on ABC’s“ This Week ”. Some prices that fell last year when the Covid-19 pandemic spread to the United States will recover, “but this is a temporary price movement,” she said.
“I don’t think it’s a significant risk,” said Yellen, a former Federal Reserve chairman. “And if that does come to pass, we will certainly be monitoring it, but we have tools to address it.”
As attention turns to President Joe Biden’s pledges to boost infrastructure spending, Yellen said “we haven’t yet decided” to pursue the type of wealth tax backed by a number progressive senators led by Elizabeth Warren and Bernie Sanders.
Campaign promises made by Biden, including higher corporate tax rates, capital gains and dividend payments, “have a similar impact to a wealth tax,” Yellen said .
Biden signed the pandemic relief package on Thursday, providing funding for vaccinations and providing assistance to households, businesses and state and local governments.
Yellen and other officials insist that the aid – which comes in addition to the pandemic relief passed by Congress last year – is absolutely necessary for an economy criticized by Covid-19, especially workers at low income strongly represented in service industries.
While unemployment in the United States remains high, especially if you include people who dropped out of the workforce in the past year, job creation has returned.
Employers added 379,000 new jobs in February, more than expected. Unemployment claims in the United States fell more than expected last week to their lowest since early November, the Department of Labor reported Thursday.
“Hopefully, if we beat the pandemic, we can bring the economy back to close to full employment next year,” Yellen said on Sunday. “And I think that’s the package we need to get there.”
Republicans objected to the size of the stimulus package, and even some liberal economists such as former Treasury Secretary Lawrence Summers questioned whether his spending was excessive given the economy as a whole has been remarkably resilient.
“If you put too much water in the tub, it starts to overflow,” Summers told CNN Sunday of the magnitude of the stimulus. “We are trying to pour too much water.”
While asserting that his perspective on fiscal sustainability has changed in an era of consistently low interest rates, Yellen said: “In the longer term, we need to bring deficits under control.”
Also on ABC, House of Commons Speaker Nancy Pelosi said infrastructure measures, the Biden administration’s next big plan for the economy, would be “financially sound.”
While suggesting that the revenue measures might include something similar to the Obama administration’s Build America Bonds, she declined to confirm that tax increases would be necessary.
“We’ll see,” Pelosi said. “We’re going to watch everything. We will review the tax code, we will review the credit allocation process, we will review the bond. “