Treasury Secretary Janet Yellen said on Thursday that a major stimulus package is still needed to bring the economy back to full strength, despite the momentum suggesting that growth is starting faster than anticipated in 2021.
In an interview with CNBC, the Biden government’s top economic official said the $ 1.9 trillion proposal could help the United States return to full employment in a year.
“We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on rent, 24 million adults and 12 million children who do not have enough to eat, small businesses failing, “Yellen told CNBC’s Sara Eisen during an interview” Closing Bell “.
“I think the price of doing very little is much higher than the price of doing something big. We think the benefits will far outweigh the costs in the long run,” she added.
Yellen said he was not concerned that all government spending could cause inflation in the future.
“Inflation has been very low for more than a decade and you know it is a risk, but it is a risk that the Federal Reserve and others have tools to deal with,” she said. “The biggest risk is leaving scars on people, making this pandemic have a permanent impact on their lives and livelihoods.”
His comments are set against the backdrop of a bright economic scenario in the United States as the Covid-19 pandemic subsides.
Recent data has shown unusual strength in retail sales, albeit thanks to Congressional stimulus checks in late 2020, as well as continued gains in real estate and manufacturing. An Atlanta Federal Reserve tracker that measures growth in gross domestic product indicates a 9.5% gain in the first quarter.
However, the job picture remains unclear, with 10 million workers still unemployed, including millions related to company closings instituted by governments in response to the pandemic. The previous Thursday, the Department of Labor reported another 861,000 claims for unemployment benefits last week, still well above anything seen since the coronavirus’s arrival.
It is these displaced workers that Yellen feels that the policy should be directed at. As part of the latest round of stimulus spending, President Joe Biden wants to send checks for $ 1,400 to millions of Americans.
“You know, there is a lot of pain in this economy,” said Yellen. “I think these checks are really going to help boost our economy by giving people money to spend when we can get out again and go back to our previous lives. So, you know, there are a lot of families that are operating on the margin. And I think these checks are going to really help them. “
Paying for the various stimulus initiatives is not something that Fed management and employees are now focusing on. The Congressional Budget Office projects a budget deficit of $ 2.3 trillion in fiscal year 2021, not counting all the additional spending, and Yellen acknowledged that “there would likely” be tax increases to be paid for at least part of it, which would probably happen slowly over time. “