US Treasury Secretary Janet Yellen admitted Tuesday that she had failed to anticipate how long high inflation would continue to plague American consumers, but said taming price hikes is President Joe Biden’s top priority and he supports the Federal Reserve’s actions to achieve that.
“I think I was wrong then about the path that inflation would take,” Yellen told CNN’s Wolf Blitzer on “The Situation Room” when asked about her comments from 2021 that inflation posed only a “small risk.” The President, Yellen said, knows “what an important and huge burden inflation is placing on American households.”
Asked by Blitzer whether she was wrong to downplay the threat that inflation posed in public statements over the past year, and whether her comments contributed to the current problems, Yellen said: “I think I was wrong then about the path that inflation would take,” adding, “As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t at the time fully understand.”
Yellen blamed her bad prediction on “further variants of COVID that have impacted our economy; Russia’s war on Ukraine, which have boosted energy and food prices globally; and the lockdowns that have occurred in China.”
She pointed to a “tremendously strong” recovery that has “brought our economy back to full employment, creating 8.3 million jobs since President Biden took office. Layoffs have declined to very low levels.”
Yellen and other White House officials once framed inflation as a temporary side effect of the economy returning to normal following the pandemic, pointing to snags in supply chains and demand outstripping supply. Yet months later, inflation is running at a near-four-decade high.
In response, the White House is launching a month long effort to signal a heavy focus on the economy. The push began on Monday with an op-ed from President Joe Biden published in The Wall Street Journal and continued Tuesday with an Oval Office sit-down among Biden, Federal Reserve Chairman Jerome Powell and Yellen.
The Treasury secretary said that Biden had indicated in the meeting that he “shares the Fed’s priority in lowering inflation, and that he believes strongly in his support of the independence of the Fed to take the steps that are necessary.”
A Treasury spokesperson told CNN in a statement that Yellen’s comments were in the context of certain unforeseen events that ended up hitting the economy.
“The Secretary was pointing out that there have been shocks to the economy that have exacerbated inflationary pressures which couldn’t have been foreseen 18 months ago, including Russia’s decision to invade Ukraine, multiple successive variants of COVID, and lockdowns in China,” the spokesperson said. “As she also noted, there has been historic growth and record job creation and our goal is now to transition to steady and stable growth as inflation is brought down.”
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