US inflation levels are not expected to decrease to acceptable levels until the latter part of 2022, Treasury Secretary Janet Yellen said Sunday.
The prediction comes as rising prices strain Americans’ wallets at grocery stores and fuel pumps amid high energy demand, already exacerbated by the coronavirus pandemic wreaking havoc on the economy. Asked when she expects inflation – which was 5.4% at the end of September – to get back to the 2% range considered acceptable, Yellen told CNN’s Jake Tapper that it would be the middle to second half of 2022.
“Well, I expect that to happen next year. Monthly rates of inflation have already fallen substantially from the very high rates that we saw in the spring and early summer,” she said on “State of the Union.” “On a 12-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement … by the middle to end of next year, second half of next year.”
She also attempted to downplay concerns over rising inflation, telling Tapper she doesn’t believe the US is losing control over inflation, and she pushed back against criticism from former Treasury Secretary Larry Summers, who has been ringing the alarm on inflation rates and spending.
“I think he’s wrong, I don’t think we’re about to lose control of inflation,” she said, although she agreed that the US is going through a period of inflation that is higher than before. “It’s something that’s obviously a concern and worrying them, but we haven’t lost control.”
Along with rising inflation, 4.3 million Americans quit their jobs in August – a record number as the supply chain of everyday goods faces an ongoing bottleneck at US ports, fueled in part by the worker shortage. At the end of August, there were 10.4 million job openings, according to the Job Openings and Labor Turnover Survey (JOLTS) report.
Yellen said she expects the bottlenecks to subside as progress is made on the coronavrius pandemic and she predicted that Americans will return to the workforce as conditions improve. Asked about the record number of Americans leaving jobs and what the Biden administration is doing to get people back to work, Yellen said, “We have a good, tight labor market.”
“Firms are obviously having trouble hiring workers, but labor supply is depressed by the pandemic,” she said. “That’s because of health concerns, because of childcare, and as we get beyond the pandemic, I expect labor supply to increase.”
President Joe Biden said during CNN’s town hall in Baltimore, Maryland, last week that he was considering deploying the National Guard to help ease the supply chain crisis, but shortly afterward, a White House official told CNN National Guard deployment is not actively being considered.
CNN’s Donald Judd contributed to this report.