After months of economic troubles caused by inflation and supply chain issues, Treasury Secretary Janet Yellen admitted she underestimated the impact of inflation on consumers. Yellen recently told CNN that the pandemic’s long-term impacts, as well as the war between Russia and Ukraine, imposed unforeseen constraints on the US economy that the Biden administration had not anticipated. As a result, the economy suffered the impact of higher food costs and congested supply chains, which she claimed they “didn’t fully understand” at the time “but we recognize that now.”
Speaking to host Wolf Blitzer, Yellen stated, “There have been a huge series of shocks to the economy that we didn’t anticipate — further variants of COVID that have impacted our economy, Russia’s war on Ukraine — which have boosted energy and food prices globally. The lockdowns that have occurred in China [were another], I think I was wrong then about the path that inflation would take.” Her remarks are in sharp contrast to comments she made last year when she said inflation was merely a “small risk” and wouldn’t be a long-term issue. She believes the Federal Reserve now recognizes the challenges it has encountered in the previous year and can begin decreasing prices. According to the consumer price index, inflation fell marginally to 8.3% in the 12 months ending in April, the first drop in eight months but still more than experts had projected.
Despite the Fed’s interest rate increases, the Bureau of Labor Statistics announced this week that inflation is still high, and it’s approaching the worst it’s been since February 1982, when the Great Inflation began. Yellen claimed that while signs of inflation slowing down are favorable, rising oil costs and Russia’s war in Ukraine, core inflation rates are still too high, indicating that further economic woes are on the way.