Treasury secretary Janet Yellen blamed the COVID-19 pandemic for the record inflation increase the U.S. is seeing and said the country must continue to “make progress” against the pandemic to get inflation under control.
CBS’s Face the Nation host Margaret Brennan asked Yellen in a pre-taped interview aired on Sunday if she is confident the price of consumer goods will return to normal levels by next November.
The Treasury secretary replied that it “really depends on the pandemic.”
“The pandemic has been calling the shots for the economy and for inflation. And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do. I think it’s — it’s — it’s important to realize that the cause of this inflation is the pandemic,” Yellen said.
Yellen’s comments come after the Labor Department released a report last week showing that inflation had reached a 31-year high.
She said the pandemic caused the spike in inflation because it “all but shut down our economy” and “led to a dramatic increase in demand for products.”
“The pandemic is really responsible, in its impact, for the inflation that we’re seeing,” she said.
“Households were unable to spend on services — going out to eat and traveling. They shifted as they stayed at home, worked more from home. They shifted their spending on to goods that led to a surge in the demand for products. And although the supply of products has increased in the United States and globally, not as much as demand,” Yellen added.
She predicted that prices could return to normal levels sometime in the second half of next year if the U.S. is “successful with the pandemic.”
Meanwhile, National Economic Council director Brian Deese said on Sunday that he and President Biden were not wrong months ago when they downplayed inflation as a short-term issue caused by the pandemic.
CNN’s Jake Tapper asked Deese if he and Biden were wrong in saying that inflation is a “short-term ‘pop up a little bit and then go back down’ issue,” especially after Biden finally acknowledged this week that inflation is “worrisome.”
“No, I don’t think so, Jake,” Deese replied. “I think what we have said consistently is that the pandemic and the economy are interlinked and certainly we saw just as the Delta variant posed real health challenges to the economy it also had economic impacts.”