Former Federal Reserve Chairman Janet Yellen speaks at a news conference following a meeting of the Federal Open Market Committee on September 20, 2017 in Washington, DC.
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Treasury Secretary Janet Yellen said Friday that despite strong labor gains last month, Congress still has to “go big” by lowering President Joe Biden’s $ 1.9 billion relief package to get millions of people back on track. to get a job.
Yellen said in an interview with PBS NewsHour on Friday that Biden’s package should not be cut simply because the February jobs report showed that 379,000 new jobs had been created, the best showing since October.
At the same rate, it will take the country more than two years to return to full service, she said. But with the package from the administration, she said the country could return to full service by next year.
“It’s a big package, but I think we need to get big now, and we can afford to get big,” Yellen said. “The most important thing is to get our economy back on track and help people get their lives back on track to make sure this pandemic does not permanently harm our workforce.”
Yellen said the unemployment rate, which fell to 6.2% in February, overestimated the improvement in the labor force because it does not count the 4 million people who stopped looking for work and dropped out of the labor market. She said the real unemployment rate is 10%.
Following the House’s approval last week, the Senate is now discussing the $ 1.9 billion relief package with supporters who want to keep Democrats in the 50-50 chamber on board, as no Republican is expected to vote for the measure. do not vote.
Asked about the turmoil in US financial markets over the past two weeks as interest rates began to rise, Yellen said she did not see the development as a sign that investors were starting to worry that inflation was getting out of hand. She said the rise in tariffs is a sign that the outlook for the economy is starting to improve as more people are vaccinated and Biden’s fiscal package moves through Congress.
The Federal Reserve “does have the tools to address inflation if it becomes a problem, but I do not see markets … worried about it,” Yellen said.
Yellen also said Biden is still committed to raising the minimum wage to $ 15 an hour. The administration will look for other legislation where the proposal can be incorporated later this year, after the Senate parliamentarian ruled it could not be part of the bill, she said.
The administration is working on a “Build Back Better” measure to increase spending on infrastructure, which will also be used to address racial inequality issues by increasing job support and training. The administration also wants to address other issues, such as paid leave and childcare, she said.
The national debt, which has grown to levels not seen since the end of World War II in terms of its ratio to the total economy, is not a threat at present, as interest rates, although rising, are still rising. historically, low levels remain, she said.
“The spending we are doing now is likely to help our debt path by getting our economy back on track,” Yellen said.