Former Federal Reserve Board Chairman Janet Yellen speaks during a news conference after a meeting of the Federal Open Market Committee on September 20, 2017 in Washington, DC.
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Treasury Secretary Janet Yellen said on Friday that despite strong job gains last month, Congress still needs to “grow” by approving President Joe Biden’s $ 1.9 trillion aid package so that millions of people get back to work sooner.
In an interview with PBS NewsHour on Friday, Yellen said Biden’s package should not be cut just because the February job report showed that 379,000 new jobs were created, the best display since October.
At this rate, the country would still take more than two years to return to full employment, she said. But with the government package, she said the country could see a return to full employment next year.
“It’s a big package, but I think we need to grow now and we can afford to do it,” said Yellen. “The most important thing is to get our economy back on track and help people get back to their lives to ensure that this pandemic does not leave permanent marks on our workforce.”
Yellen said the unemployment rate, which fell to 6.2% in February, is exaggerating the improvement in the workforce because it does not account for the 4 million people who have stopped looking for work and have left the labor market. She said the real unemployment rate is 10%.
Following House approval last week, the Senate is now debating the $ 1.9 trillion aid package with supporters trying to keep Democrats on the 50-50 board, as no Republicans should vote in favor of the measure. .
Asked about the turmoil in the US financial markets in the past two weeks, as interest rates began to rise, Yellen said she did not see this development as a sign that investors are beginning to fear that inflation is getting out of hand. . She said the rate hikes are a sign that the outlook for the economy is starting to improve as more people are vaccinated and Biden’s tax package comes to Congress.
The Federal Reserve “has the tools to deal with inflation if it becomes a problem, but I don’t see the markets … concerned about that,” said Yellen.
Yellen also said that Biden remains strongly committed to raising the minimum wage to $ 15 an hour. The government will seek other legislation later this year where the proposal could be included, after the Senate parliamentarian decided that it could not be part of the aid bill, she said.
The government is working on a “Build Better” measure to increase spending on infrastructure that will also be used to address problems of racial inequality, increasing support for professional training and education, she said. The government also wants to deal with other issues, such as paid leave and daycare, she said.
The national debt, which has grown to levels never seen since the end of the Second World War in terms of its relation to the total economy, is not a threat at this moment, given that interest rates, although they have risen, remain historically U.S. low levels, she said.
“The expenditures we are making now are probably helping our debt trajectory by putting our economy back on track,” said Yellen.