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U.S. could return to full employment in 2022 with Biden's relief package, Yellen says

Christian Fernsby |
The United States could return to full employment in 2022 if it enacts President Joe Biden's 1.9-trillion-U.S.-dollar COVID-19 relief package, U.S. Treasury Secretary Janet Yellen said on Sunday.

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Topics: U.S.    BIDEN    YELLEN   

"There's absolutely no reason why we should suffer through a long, slow recovery," Yellen said on CNN's "State of the Union." "I would expect that, if this package is passed, that we would get back to full employment next year."

Citing a recent analysis from the Congressional Budget Office, Yellen said the U.S. unemployment rate is going to "stay elevated for years to come" without additional support.

"It would take until 2025 in order to get the unemployment rate down to 4 percent again," she said.

U.S. employers added just 49,000 jobs in January, after slashing downwardly revised 227,000 jobs in December, the Labor Department reported Friday.

The unemployment rate, meanwhile, fell by 0.4 percentage point to 6.3 percent in January, still well above the pre-pandemic level of 3.5 percent in February 2020.

Yellen also downplayed the potential inflation risk from the 1.9-trillion-dollar COVID-19 relief package.

"My predecessor has indicated that there's a chance that this will cause inflation to rise. And that's also a risk that we have to consider. I have spent many years studying inflation and worrying about inflation," said the treasury secretary.

"We have the tools to deal with that risk if it materializes. But we face a huge economic challenge here and tremendous suffering in the country. We have got to address that. That's the biggest risk," she added.

Yellen's remarks came after both chambers of U.S. Congress on Friday passed a budget resolution, a key step which would allow Democrats to push through Biden's relief package without Republican support.

"We need a big package. And we need to get this done quickly. And those are the things that the president is really committed to," she said.

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