Treasury Secretary Janet Yellen said Thursday that a large package of stimulus is still needed to revive the economy, though the momentum suggests growth is starting faster than expected for 2021.
In a CNBC interview, the chief economic officer of the Biden administration said the $ 1.9 trillion proposal could help the U.S. return to full employment in a year.
“We think it ‘s very important to have a great package [that] addresses the pain this has caused: 15 million Americans with their rent, 24 million adults and 12 million children who do not have enough food, small businesses fail, ”Yellen told CNBC’s Sara Eisen during a interview with “Closing Bell”.
“I think the price of doing too little is much higher than doing something big. We believe the benefits will far outweigh the long-term costs,” he added.
Yellen said he is not worried that all government spending could cause inflation on the road.
“Inflation has been very low for over a decade and you know it’s a risk, but it’s a risk that the Federal Reserve and others have the tools to address,” he said. “The biggest risk is that people will be able to scar, as this pandemic will have to go through life and livelihoods forever.”
His comments come in the context of a happier economic outlook in the US as the Covid-19 pandemic subsides.
Recent data has shown an unusual strength in retail sales, albeit thanks to late 2020 stimulus controls by Congress, as well as continued gains in real estate and manufacturing. An Atlanta Federal Reserve follower measuring gross domestic product growth indicates a 9.5% increase in the first quarter.
However, the labor landscape remains murky, with 10 million workers still without jobs, including millions related to business stoppages instituted by governments in response to the pandemic. Earlier Thursday, the Labor Department reported last week about 861,000 claims for unemployment benefits, well above anything seen since the coronavirus arrived.
They are those displaced workers where Yellen believes politics should be directed. As part of the latest round of stimulus spending, President Joe Biden wants to send $ 1,400 checks to millions of Americans.
“You know, there’s so much pain in this economy,” Yellen said. “I think these controls will really provide relief and help start our economy, 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 running on the sidelines. And I think those controls will really help them. “
Paying for the various stimulus initiatives is not a matter for the administration and now Fed officials have focused. The Congressional Budget Office projects a $ 2.3 trillion budget deficit in 2021, not counting all added spending, and Yellen acknowledged that there would “probably” be tax increases to pay at least one part that would probably slowly enter time. “