Treasury Secretary Janet Yellen said that controlling the Covid-19 virus in the United States is the key to easing inflation.
“It is important to realize that the cause of this inflation is the pandemic,” Yellen said on CBS’s “Face the Nation” on Sunday.
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“If we want to reduce inflation, I think that continuing to advance against the pandemic is the most important thing we can do,” he said.
Yellen and White House economic adviser Brian Deese fanned out on Sunday morning talk shows to face repeated questions about inflation, a growing political risk for President Joe Biden as the numbers of polls decline and Democrats dispute his economic agenda.
Biden’s overall approval rating fell to 41%, compared to 50% in June and 44% in September, in the latest Washington Post-ABC News poll. It suggests that about half of Americans in general, as well as independent politicians, blame Biden for inflation that accelerated to 6.2% in the 12 months through October.
Yellen repeated that he expects inflation to decline by the second half of 2022.
“When the labor supply normalizes and the demand pattern, I would expect that, if we are successful with the pandemic, sometime in the second half of next year, prices will return to normal,” Yellen said. .
Rising inflation has also complicated Biden’s bid to pass a $ 1.75 trillion bill that finances long-term investments in social benefits like child care and health care, while expanding taxes. West Virginia Sen. Joe Manchin, a moderate Democrat whose support for the bill has wavered, has expressed concern that the measure will add to the price hike.
Deese, the director of the White House National Economic Council, argued that it would have the opposite impact by reducing the cost of child care, health care and housing.
“All of these things are going well to lower costs for American families,” Deese said on CNN’s “State of the Union.”
He said the additional spending would not add to inflation because it would be “paid for in full” through tax increases on corporations and high-income households. The administration “is confident that this bill will go to the House this week, that we will get a vote, it will pass and it will go to the Senate,” Deese said on ABC’s “This Week.”
He declined to say whether Biden would turn to the Strategic Petroleum Reserve to help lower gasoline prices.
“The president has made it clear that all options are on the table,” Deese said on CNN. “We are monitoring the situation very carefully.”
Biden has hinted in recent days that he would act to control gas prices, which are at their highest in seven years and have contributed significantly to the rise in consumer prices.
Former Treasury Secretary Lawrence Summers said inflation momentum has built up to the point that “some significant policy adjustment or some unfortunate accident that slows the economy will be needed before inflation returns to the 2% range. “.
“I think for many people, inflation is a test of whether the country is under control,” Summers, a paid Bloomberg contributor, said on CNN’s “Fareed Zakaria GPS” show.
© 2021 Bloomberg