Treasury Secretary Janet Yellen touted the Biden administration's economic accomplishments during the president's first year in office on Thursday, saying she expects inflation to be closer to 2% by the end of 2022.
She emphasized the labour market's strong performance in the recent year, citing the addition of over 6 million jobs and a low unemployment rate of under 4%.
"If you look back a year to the issues that we and the Federal Reserve were confronting, unemployment was at an all-time high." "We were all concerned that we'd end up in a position similar to what we saw in 2008, when it took nearly a decade to get to full employment," Yellen said.
"I believe it has to be considered as a great success that unemployment has dropped the most in a year in American history," Treasury Secretary Timothy Geithner said on CNBC's "Closing Bell."
The White House and the Treasury Secretary continue to emphasize the importance of job creation. Following the Covid-19 pandemic, companies in the United States added a record 6.4 million jobs in 2021, while the unemployment rate remained below 4%, according to the most recent Labor Department figures.
Yellen spent much of 2021 managing White House economic policies and the disbursement of Covid-19 emergency funding to American consumers and businesses as President Joe Biden's nominee to run the agency.
Yellen did admit that the economy isn't ideal and that inflation is causing hardship to those who haven't experienced comparable wage increases.
"I expect inflation to continue above 2% for the majority of the year – 12-month changes," she said. "However, if we are successful in controlling the pandemic, I expect inflation to decline over the course of the year, reverting to typical levels around 2% by the end of the year."
In recent months, she and other administration advisers have worked to allay public concerns about a dramatic increase in costs due to widespread supply-chain disruptions and high demand for commodities. The Labor Department reported earlier this month that prices jumped 7% year over year in December, the most effective inflation rate since 1982.
On Wednesday, Yellen echoed Biden's remarks when the president suggested the Federal Reserve and Chairman Jerome Powell should "recalibrate" monetary policy to bring prices down. The Fed is responsible for controlling inflation at or below 2% and can boost interest rates to combat rising costs throughout the economy.
For months, Powell and other Fed officials have hinted that the world's most powerful central bank may shortly raise borrowing costs. While the exact date of the first-rate hike is unknown, Wall Street predicts a quarter-point rise in March with a 90% chance.
Yellen advised Trump on his Fed board selections, including Powell's reappointment, whom she has commended for helping the central bank sustain the economy through the pandemic.
More recently, Yellen has championed the Biden administration's attempt to enact the Build Back Better plan, a significant climate change, child care, and worker-focused piece of legislation. Republicans are united in their opposition to the package, claiming to exacerbate the existing inflation crisis.
Resistance from within the Democratic Party, on the other hand, has slowed movement on the Build Back Better bill. Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, both centrist Democrats, have expressed worries about the bill's size and scope and how it would affect prices.
Yellen and the rest of the Biden administration have dismissed these fears, claiming that already-enacted infrastructure legislation and the Build Back Better plan will help address supply chain challenges and high inflation.