Treasury Secretary Janet Yellen said Thursday a big stimulus package was still needed to get the economy going again, although momentum suggests growth will start faster than expected in 2021.
In a CNBC interview, the Biden administration’s business leader said the $ 1.9 trillion proposal could help the US get back 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 falling short of their rent, 24 million adults and 12 million children who don’t have enough to eat, small business failures, “Yellen told Sara Eisen at Closing Bell .
“I think the price of too little is much higher than the price of something big. We believe the benefits will far outweigh the costs in the long run,” she added.
Yellen said she wasn’t worried that all government spending could lead to inflation later.
“Inflation has been very low for over a decade, and you know that is a risk, but it is a risk that the Federal Reserve and others have tools to deal with,” she said. “The greater risk is scaring people as this pandemic is permanently affecting their lives and livelihoods for life.”
Your comments are set against the backdrop of a brightening economic picture in the U.S. as the Covid-19 pandemic subsides.
Recent data has shown that retail sales are unusually strong, albeit thanks to the congressional economic reviews in late 2020 and continued gains in real estate and manufacturing. A tracker from the Atlanta Federal Reserve that measures gross domestic product growth shows growth of 9.5% in the first quarter.
However, the employment picture remains bleak: 10 million workers are still unemployed, including millions related to company closures launched by governments in response to the pandemic. Earlier Thursday the Labor Department reported another 861,000 claims for unemployment benefits last week, still well above anything seen since the coronavirus outbreak.
It is these displaced people that Yellen believes should be directed at politics. As part of the latest round of stimulus spending, President Joe Biden plans to send 1,400 checks to millions of Americans.
“You know, there is so much pain in this economy,” said Yellen. “I think these checks are really going to bring relief and help kickstart our economies and give people money to spend when we can get out and go back to our previous lives. So you know there are a lot of families out there are on the verge. And I think these controls will really help them. “
Paying for the various stimulus packages is not something the government and Fed officials are focusing on now. The Congressional Budget Office is forecasting a budget deficit of $ 2.3 trillion in fiscal year 2021, not even taking into account any additional spending, and Yellen acknowledged there would be “likely” tax increases to pay at least part of that which would probably come slowly over time. “