Yellen States It Is Unlikely for US Economy to Experience ‘Stagflation’

Yellen States It Is Unlikely for US Economy to Experience ‘Stagflation’

In an interview on Fox Business, Treasury Secretary Janet Yellen dismissed concerns about stagflation in the US economy. She explained that most forecasters anticipate inflation to decrease as housing costs decline, with rental prices for new apartments dropping in many areas across the country. Yellen’s comments came after JPMorgan Chase CEO Jamie Dimon raised the possibility of stagflation, a scenario involving economic stagnation and rising costs.

Yellen emphasized that housing costs are the primary factor driving inflation in the country and expressed confidence that they will decrease this year, alleviating price pressures. She admitted regret over previously describing US inflation as “transitory,” acknowledging that price increases have persisted longer than expected. Consumer inflation peaked in 2022 but unexpectedly rose to 3.2% in February, making the path to lowering prices a challenging one.

Regarding the dollar’s reserve currency status, Yellen highlighted the depth and liquidity of US financial markets, Treasury securities, and institutional foundation that support the dollar’s use. During her visit to Kentucky to promote President Joe Biden’s economic growth initiatives, Yellen underscored the investments in clean energy and manufacturing that have flowed into communities once reliant on industries like coal.

Since the beginning of the Biden administration, Yellen stated that companies have announced nearly US$650 billion in investments in clean energy and manufacturing nationwide. She also mentioned the Treasury Department’s efforts to inform cities about the benefits, including tax credits, available through the Inflation Reduction Act. Yellen’s visit to an Advanced Nano Products factory in Elizabethtown symbolized the administration’s focus on fostering economic growth in regions transitioning away from traditional industries.

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