Yellen touts boost, "fairness" from Biden economic policy wins
Treasury Secretary Janet Yellen on Thursday touted the economic impact of the Biden administration’s agenda, while acknowledging the blow soaring inflation has delivered to households.
Why it matters: The remarks, delivered in a speech outside of Detroit, mark the beginning of a weekslong effort to sell President Joe Biden’s policies ahead of the midterm elections. With decades-high inflation, the economy remains an issue front-and-center for voters.
Details: Yellen argued the White House's trio of legislative wins — which collectively unlocked trillions of dollars in new spending for domestic semiconductor manufacturing, infrastructure and climate change-related efforts — would help blunt some of the economy's issues.
- Yellen said the policy wins would result in "expanded productive capacity of our economy, increased resilience to global shocks, and greater fairness for workers and businesses.”
Between the lines: The Biden administration's victory lap comes at a pivotal time for the economy, with a mix of good and bad news muddying the outlook.
- Inflation is cooling — thanks, in part, to plummeting gasoline prices — but it remains painfully high.
- Yet the Federal Reserve is raising borrowing costs at a historic pace to slow the economy, in a bid to cool torrid prices. Fed officials have conceded that bringing inflation down will deliver economic pain to households, possibly in the form of higher levels of unemployment.
- "The most immediate challenge is to return to an environment of stable prices without sacrificing the economic gains of the past two years," Yellen said.
A respected economist who served as the former chair of the Fed, Yellen acknowledged some of the other economy's lingering problems.
- "Sluggish productivity growth and declining labor force participation have weighed down our economic potential. And growing disparities in economic conditions across geographies and racial groups have exacerbated inequality," Yellen said.
- She also acknowledged the pandemic and Russia's invasion of Ukraine "remind us of our vulnerability to global supply shocks” and noted that the threat of climate change "looms very large."
Zoom out: Yellen spoke from the factory floor of the Ford Rouge Electric Vehicle Center, a plant where the auto giant assembles F-150 Lightning electric pick-up trucks. Ford executives were present at Yellen’s speech, including CFO John Lawler.
- The Biden administration views the auto industry as a central part of its vision for the economy, a senior Treasury official told reporters. Among other things, that includes a larger presence of electric vehicles.
- “Benefits from the legislation, including incentives from electric vehicle tax credits, won’t accrue overnight.
What's next: Yellen's trip to Detroit is the first stop on tour over the next month to push Biden's economic agenda.