In March 2021, when inflation hawks were arguing that the Biden administration’s $1.9 trillion stimulus plan was going to overheat the economy, Yellen called the risk of inflation “small” and “manageable,” and a couple of months later said, “I don’t anticipate that inflation is going to be a problem.” She wasn’t alone. For much of 2021, Federal Reserve Chair Jerome Powell said that he thought inflation would be “transitory,” and even as inflation rose above 6 percent, the Fed kept interest rates near zero. (Its first interest-rate hike was not until March 2022.)
Indeed, with
today’s news that inflation in May (2022) was 8.6 percent (previously
at 8.3 percent),
it is arguably the biggest problem that the Biden administration faces—high
prices are overshadowing pretty much everything else about the U.S. economy.
The unemployment rate is a mere 3.6 percent, and last week, the Labor
Department announced that the U.S. had added another 390,000 jobs in May. But all anyone wants
to talk about is that average gas prices are now nearing $5 a
gallon.
When Yellen moves so quickly from Fed chair to Treasury Secretary, it is difficult to believe that she was operating the Fed independently of Democratic political interests.
No comments:
Post a Comment