“Simply put, our recovery is on track,” said Yellen during the Chamber’s annual meeting, which was held virtually.
In January, Yellen had said there was a “real threat” that the economy could be stretched into a prolonged recession. On Monday, she said the US has moved away from that threat, thanks to initiatives, such as the $1.9 trillion American Rescue Plan stimulus package, that have since passed Congress.
“While it’s certain that America will come back from this pandemic, we also have to make sure that America thrives,” she said.
Yellen had last visited Rhode Island in 2015, also with the Greater Providence Chamber of Commerce; at that time, she said it was clear that the state was still “very slowly” recovering from the Great Recession. In 2015, inflation was low (about 1.5 percent) but unemployment was high, said Yellen. During the financial recession of 2008, state and local governments also did not receive economic support from the federal government, which caused low spending and layoffs. She said during the pandemic, economists and the US government “learned their lesson” and started pumping money into state and local governments.
Yellen said the pandemic has caused monthly US inflation to peak at 6.2 percent, which she said is a “terrifying thought.”
“But we’ve kept people in good, financial shape,” said Yellen. “They diverted their spending from services to goods and products that need to be produced in the US.”
Now, the issue is that shipping delays and staffing shortages. including of truck drivers to delivery goods, are causing gridlocks at the Port of Los Angeles, which handles the majority of the country’s imported goods.
The shortage of semi-conductors have caused automobile manufacturers to curb production, which has forced inflation to rise again. To make matters worse, she said, many Americans have not returned to the workforce because they are worried about the pandemic or cannot find affordable childcare.
“But all of these things are pandemic-related,” she said. “I expect these pressures to subside… But I expect monthly inflation rates to move down to 2 percent” in the second half of 2022.
But at the same time, Yellen said there’s pressure for companies to shift operations and profits overseas because of the tax system in the US. And companies that are still based in the US are “competing on a playing field that is tilted against them,” she said.
Yellen has a long professional relationship with the Ocean State. In 1967, she graduated from Pembroke College in Brown University with a bachelor’s degree in economics.
“And these days, I’m working very closely with Gina Raimondo. So [Rhode Island] is always on my mind,” said Yellen.
The steady leadership of Chair Powell & the Federal Reserve helped ensure our economy was able to recover from a once-in-a-generation health & economic crisis. I’m pleased our economy will continue to benefit from his stewardship, & the expertise & experience of Lael Brainard. pic.twitter.com/IKT5mwIcdO
— Secretary Janet Yellen (@SecYellen) November 22, 2021
Yellen also told White that she was pleased with President Joe Biden’s renomination of Jerome Powell for a second four-year term as Federal Reserve chair, which was announced Monday morning.
The renomination was seen as an endorsement of Powell’s stewardship of the economy throughout the pandemic recession.
“An independent and experienced Federal Reserve was critically important to navigating this turbulent time and will continue to be crucial as we recover and confront new threats to our economy. Over the past few years, Chair Powell has provided strong leadership at the Federal Reserve to effectively meet and address unexpected economic and financial challenges, and I am pleased our economy will continue to benefit from his stewardship,” she said in a statement.
Alexa Gagosz can be reached at [email protected]. Follow her on Twitter @alexagagosz.
