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Treasury Secretary Janet Yellen said on Thursday that a broad stimulus package was still needed to bring the economy back to full strength, despite momentum suggesting growth is starting faster than expected in 2021.
In an interview with CNBC, administration chief economic officer Biden said the $ 1.9 trillion proposal could help the United States return to full employment within a year.
“We think it’s very important to have a big package [that] responds to the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who do not have enough to eat, small businesses fail, ”Yellen told CNBC’s Sara Eisen in a “Closing Bell” interview.
“I think the price of doing too little is much higher than the cost of doing something big. We believe the benefits will far outweigh the costs in the long run,” she added.
Yellen said she was not worried that all government spending could cause inflation in the future.
“Inflation has been very low for over a decade, and you know it’s a risk, but it’s a risk that the Federal Reserve and others have the tools to deal with,” he said. she declared. “The biggest risk is to scarring people, to see this pandemic wreak lifelong devastation on their lives and livelihoods.
His comments come against the backdrop of an improving economic picture in the United States as the Covid-19 pandemic abates.
Recent data has shown unusual strength in retail sales, albeit thanks to Congressional late 2020 stimulus checks, as well as continued gains in real estate and manufacturing. An Atlanta Federal Reserve tracker that measures gross domestic product growth shows a 9.5% gain in the first quarter.
However, the employment picture remains murky, with 10 million workers still unemployed, including millions linked to business closures instituted by governments in response to the pandemic. Earlier Thursday, the Ministry of Labor reported 861,000 more jobless claims last week, still well above anything seen since the coronavirus hit.
It is these displaced workers upon whom Yellen believes policy should be directed. As part of the latest round of stimulus spending, President Joe Biden wants to send checks for $ 1,400 to millions of Americans.
“You know, there is so much pain in this economy,” Yellen said. “I think these checks will really bring relief and help jumpstart our economy, giving people money to spend when we can move on and return to our old lives. So, you know, there are a lot of families that operate on the margins. And I think these checks will really help them. “
The administration and Fed officials are not focusing on paying off the various stimulus initiatives. The Congressional Budget Office projects a budget deficit of $ 2.3 trillion in fiscal 2021, not counting any additional spending, and Yellen acknowledged that there would be “likely” “tax increases for pay for at least a portion of these, which would likely gradually scale up over time. “
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