Sep 1, 2022 - Politics & Policy

First look: Yellen kicks off month-long economic victory tour

Janet Yellen standing next to an American flag
U.S. Treasury Secretary Janet Yellen attends the meeting with South Korean Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho. (Photo by Chung Sung-Jun/Getty Images)

Treasury Secretary Janet Yellen will deliver a major economic speech in Detroit next week as part of a month-long push to sell President Biden's signature legislative achievements before the midterms, Axios has learned.

Why it matters: Deploying Yellen, an economist who has been reluctant to lend her name to arguments she doesn’t buy, is the administration's attempt to seize on a spate of positive headlines and make a broader intellectual argument for Biden's efforts to re-engineer large sections of the economy.

  • Yellen will defend the administration's March 2021 $1.9 trillion American Rescue Plan — which Republicans blame for stoking inflation — as a key factor in preventing the economic recovery from stalling out during the pandemic.
  • She will also focus on a trio of legislative accomplishments — with trillions in collective new spending for infrastructure, semiconductors and climate change — as critical to improving productivity and growing the economy from the middle class out.

The big picture: The post-COVID economy is sending a variety of contradictory messages, confounding economists and making Biden politically susceptible to negative economic data, headlines and perceptions.

  • On the positive side is the persistent strength of the job market, with a 3.5% unemployment rate and an economy that added 528,000 jobs in July. That job growth has dramatically exceeded the White House's own forecasts of around 150,000 new jobs per month.
  • Moving in the opposite direction from the jobs numbers is GDP: a 0.9% contraction in the second quarter has ignited a raging debate over whether the U.S. economy is in a recession.
  • The S&P 500's 4% decline in August won't make Yellen's job any easier if it carries into September.

Zoom out: The White House is privately — and publicly — giddy that gas prices are down from their $5 highs. The steady decline has provided a boost to consumer confidence, according to the Morning Consult/Axios Inequality Index.

Driving the news: Yellen will deliver remarks Sept. 8 at a Detroit auto manufacturer — giving her an opportunity to highlight the new money for electric vehicles in August's Inflation Reduction Act, as well as Biden’s broader efforts to support American manufacturing and bring supply chains closer to home.

  • She'll address tax fairness in a D.C. address the following week, before heading to North Carolina for a trip focused on clean energy technology.
  • The speeches will serve as an update to the "modern supply side economics" address she delivered (virtually) at Davos earlier this year as a counter to "Reaganomics."

Between the lines: The Treasury Department will play a key role in implementing the Inflation Reduction Act, from administering the electric vehicle tax credits to cracking down on tax evasion.

  • Yellen wants to ensure her department remains in the driver's seat in Biden's overall effort to grow the economy for the middle class.

What we're watching: Friday's September jobs report may provide some clues into whether companies are shedding jobs or slowing hiring in response to the economic uncertainty.

Be smart: Yellen can't convince consumers they're better off than their bank statements and grocery bills indicate. And if she paints the economy too rosily, she risks damaging her own credibility.

  • What Yellen can do is make the intellectual argument to markets, major employers and voters that team Biden has a long-term plan to ensure the economic recovery is durable and dynamic.
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