The following is the full transcript of an interview with Treasury Secretary Janet Yellen airing Sunday, November 14, 2021, on “Face the Nation.”
MARGARET BRENNAN: Madam Secretary, thank you so much for having us and for making time.
TREASURY SECRETARY JANET YELLEN: Well, thank you for the invitation.
MARGARET BRENNAN: You have said that inflation is likely to be with us until the second half of next year. Are you confident that prices for the average American will be down by the time we head into next November and Election Day?
SECRETARY YELLEN: Well, it really depends on the pandemic. The pandemic has been calling the shots for the economy and for inflation. And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do. I think it’s- it’s- it’s important to realize that the cause of this inflation is the pandemic. It shut- all but shut down our economy. It boosted unemployment to almost 15% and we’ve been opening up in fits and starts. And the pandemic is really responsible, in its impact for the inflation that we’re seeing. It led to a dramatic increase in demand for- for products. Households were unable to spend on services — going out to eat and traveling. They shifted as they stayed at home, worked more from home. They shifted their spending on to goods that led to a surge in the demand for products. And although the supply of products has increased in the United States and globally, not as much as demand. You know, we- President Biden’s top priority after he was elected was, of course, vaccinations, trying to defeat the pandemic and get people back to work. We passed the American Rescue Plan, and when you think about what would have happened without that, I mean, what a success that unemployment has declined from almost 15% to under 5% now. Americans feel confident about the job market. Quits have increased up to record numbers, which is a sign that people are getting outside offers. They’re seeing wage increases. That is something that didn’t have to happen, and it really reflects the support that we gave to Americans to keep up their spending and make it through the pandemic. But with supply disruptions and this huge shift in- in- in demand toward products, we are seeing some broad-based price increases. We have shortages of semiconductors; that’s really caused new and used car prices to rise, car production to decline–
MARGARET BRENNAN: Twenty-six percent year over year for used cars, gasoline up 50%, eggs 12%, milk 6%, coffee 6%. So when–
SECRETARY YELLEN: We are seeing some big increases in prices.
MARGARET BRENNAN: When does it get better? When do those spikes abate?
SECRETARY YELLEN: You know, when the economy recovers enough from COVID, the demand patterns, people go back to eating out, traveling more, spending more on services, and the demand for products, for goods begins to go back to normal. And also, labor supply has been impacted by the pandemic. Labor force participation is down, it hasn’t recovered.
MARGARET BRENNAN: Mhmm.
SECRETARY YELLEN: Probably many people remain concerned about the health consequences of working. Child care arrangements may be disrupted. But with- when labor supply normalizes and the pattern of demand normalizes, I- and I would expect that if we’re successful with the pandemic to be sometime in the second half of next year, I would expect prices to go back to normal.
MARGARET BRENNAN: Because there could be a political cost to this, which is why I ask about November, of course.
SECRETARY YELLEN: Yes. Well, there’s an economic cost and Americans feel that. And when gas rises – the average is now over $3 a gallon, in some places, quite a bit higher – Americans notice it and it- it makes- it makes a difference. But I just think it’s important to put inflation in context of an economy that is improving a lot from what we had right after the pandemic and is making progress.
MARGARET BRENNAN: In terms of near-term relief, China’s leaders have repeatedly asked for the Trump era tariffs to be lifted. If the Biden administration did that, would it make things cheaper?
SECRETARY YELLEN: It would make some difference. Tariffs do tend to raise domestic prices. We put those tariffs in place; President Trump and his administration did as a retaliation for unfair trade practices–
MARGARET BRENNAN: Should they stay in place?
SECRETARY YELLEN: You know, we have said- the U.S. Trade Representative Katherine Tai has said that we are revisiting the phase one trade deal and recognizing requests to reduce tariffs in some areas. So that’s certainly something that’s under consideration.
MARGARET BRENNAN: Also on China, before we leave that space, there are fears about toxic debt in China and a potential Lehman Brothers moment. How concerned are you about the risk to the rest of the world by what’s going on inside of China right now? Are you confident China can control it?
SECRETARY YELLEN: Look, it’s something that’s important that we’re monitoring closely. China has a real estate- a real estate sector with firms that are overleveraged, and it’s something that China is trying to deal with. Real estate is an important sector of the Chinese economy. It accounts for about 30% of demand. And a slowdown in China, of course, would have global consequences. China’s economy is large, and if China’s economy were to slow down more than expected, it certainly could have consequences for many countries that are linked to China through trade.
MARGARET BRENNAN: But you believe they can manage the risk right now?
SECRETARY YELLEN: They’re certainly trying to do that, and it’s something we’re watching closely.
MARGARET BRENNAN: When we talk about the supply part of the challenge you’re dealing with here in the United States, is it the private sector’s job to unclog the supply chain? Or is there more that you can be doing within the administration right now?
SECRETARY YELLEN: Well, short run, we are looking for everything that we can possibly do to help unclog supply chains. The supply chains are by- are by and large private. But nevertheless, sometimes help in coordinating actions is useful and necessary to unclog supply chains. We have been talking with the operators of ports in Los Angeles, in Long Beach, in Savannah, trying to understand why there is such backlog of ships waiting to offload their goods in Long Beach, in Los Angeles. We’ve talked with big retailers who often have been leaving containers at the ports rather than moving them quickly. As the president- as president, Biden announced, those ports have agreed to stay open 24/7. And we’ve talked to the retailers about trying to move their containers out to create more room. We have similar discussions taking place in Savannah. So there are things that we can do to bring private- private parties together to better coordinate and to work through how we can relieve some of these supply bottlenecks. And we’re certainly doing that. We’re leaving no stone unturned, even though this- this is mainly private.
MARGARET BRENNAN: Of course, it’s so important at this time of year. But when you were talking earlier about a much brighter jobs picture, there are record level of job openings right now.
SECRETARY YELLEN: That’s right.
MARGARET BRENNAN: And yet there’s a worker shortage at the same time. What is going on with the supply and demand mismatch here?
SECRETARY YELLEN: Well, you know, first of all, the programs that were put in place, the American Rescue Plan and the CARES Act and other programs, really were intended to support households and families to get through this so that they didn’t take a huge hit to their income. So financially, Americans say they feel good about their finances, and that’s not an accident. And they’re spending a lot, so demand is strong in spite of the fact that the pandemic has had a big impact on our economy. And that’s good, because if you remember after the 2008 financial crisis, unemployment spiked. It took a really long time to go down–
MARGARET BRENNAN: -A decade.–
SECRETARY YELLEN: –and household finances were decimated. That hasn’t occurred this time, so that’s the good piece. But spending is strong and the supply of workers is not back up to normal.
MARGARET BRENNAN: Right.
SECRETARY YELLEN: People haven’t- labor force- unemployment is low and labor force participation is quite depressed relative to pre-pandemic levels. I think part of it reflects concerns about COVID and exposure to COVID, especially in jobs that involve public facing activities. And I- partly, you know, the fact that childcare workers, educators are in short supply creates childcare problems. That also tends to suppress labor supply. So as I say, when we really get control of the pandemic, I think labor supply will go back to normal. But yes, we have a tight labor market, not a loose labor market. The unemployment rate is down to 4.6 percent. As I say, labor supply is abnormally low, I believe, because of the pandemic.
MARGARET BRENNAN: But there is a skilled worker shortage in many places. I mean, are we at a place where we need to increase immigration in order to meet this challenge?
SECRETARY YELLEN: Well, you know, there are a lot of issues involved in immigration, but that- I believe that is one reason that we do face supply shortages- shortages of certain kinds of workers. I mean, we’ve long had a problem of more jobs available for skilled workers and declining opportunities for less skilled workers. So focusing on education and training was important and continues to be.
MARGARET BRENNAN: What does the economic recovery look like without paid leave?
SECRETARY YELLEN: Well, you know, I think we will still have an economic recovery that will be strong and, you know, support ongoing growth. But labor force participation for- particularly for women has been a problem in the United States now for some time. Once upon a time, female labor force participation in the United States was higher than almost any developed country. And now that is absolutely not the case. And when you compare it to the United States with other developed countries, a big difference that stands out is a lack of support for- for people working–
MARGARET BRENNAN: Right.
SECRETARY YELLEN: –and particularly for women. Now, I’m very hopeful and fully expect the Build Back Better package to become law,–
MARGARET BRENNAN: But it was taken out of the framework-
SECRETARY YELLEN: –Yes, so-
MARGARET BRENNAN: And it’s unlikely to have full support in the Senate.
SECRETARY YELLEN: Paid- paid leave- it’s important, it’s an important support for people to be able to work. But there’s a great deal of support in that package for child care. It does a lot to make child care more affordable so that for most families, child care expense would be reduced from, I think, about 13% now down to no more than 7% of their income.–
MARGARET BRENNAN: So I-
SECRETARY YELLEN: –There would be two additional years of early childhood education that would be universal and a child tax credit that would help families be able to afford to take good care of their children and also participate in the workforce. So I think that package will help boost labor force participation, particularly that of women. Paid leave is another component that would add to that, but there’s a lot in that package that will make a difference.
MARGARET BRENNAN: So you think what’s in there is sufficient because back in February, you told me women’s participation is down because they don’t have access universally to paid family and medical leave and child care. Is it essential to full economic recovery?
SECRETARY YELLEN: Well, we- we’re supportive, President Biden and I, of paid leave, and it’s something that we will try to legislate in the future. It looks like it won’t be a component of this package, but as I say, there’s quite a lot in the package that will be supportive of labor force participation. There’s money in this package also to improve home health care for elderly citizens who have health issues. And for those who are disabled. And again, that’s a support that will make it easier for people to- to work and care for family members at the same time.
MARGARET BRENNAN: I’m told we are out of time, but I want to quickly ask you — the president’s expected to make his selection for the Fed chair. Do you believe Jerome Powell should be renominated? How important is continuity?
SECRETARY YELLEN: I am going to leave it to the president to make a decision. I’ve said that I think Chair Powell has done a very good job of running the Fed, of addressing the issues, particularly that arose when the pandemic struck. But what’s important is that President Biden choose someone who’s experienced and credible and there are a range of candidates.
MARGARET BRENNAN: Thank you very much, Madam Secretary, for your time. There’s much more we could talk about.
SECRETARY YELLEN: Of course. Absolutely.
MARGARET BRENNAN: We thank you for having us here.
SECRETARY YELLEN: Well, thanks very much for the invitation. Happy to have you.
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