We May Have Some Positive News For You!

Newly appointed U.S. Treasury Secretary Janet Yellen said, “[The United States] could reach full employment next year if Congress passes President Joe Biden’s $1.9 trillion stimulus package.” Continued weakness of the U.S. jobs market is one of the drivers for Biden to get the massive financial aid package passed in Congress.

Full employment, according to economists, is at around 5% unemployment. It’s believed that it’s natural for an economy to have this amount of people in between jobs at any one point in time.

The Department of Labor reported that America is at over 6% unemployment. These numbers are highly suspicious, as the data neglects to include all of the people who’ve collected their share of benefits, but still don’t have a job. They just magically fall off the radar. The government statistics ignore all of the older workers who were forced out of the job market because they couldn’t find any appropriate jobs. It also overlooks millions of Americans who were thrust into the gig economy, contract work or had to take jobs beneath their level of education and experience just to put food on the table.

But let’s not let this get in the way of the positive narrative. Yellen points to a forecast by the Congressional Budget Office, which predicts that “without additional stimulus, the unemployment rate would remain elevated for several years.”

In response to inquiries over the strong possibility of increasing inflation with all of the money being dropped from helicopters into the economy, the former Federal Reserve chair said, “The biggest risk to the economy was not doing enough to help the unemployed,” and stop yapping about inflation (okay, Yellen didn’t say the last part).

Larry Summers, who served as Bill Clinton’s treasury secretary and Barack Obama’s top economic adviser, warned that Biden’s plan might trigger “inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.” Yellen responded by stating that while she was worried about “all risks to the economy,” the “most important risk” was failing to adequately help workers and not doing enough to address the economic impact of the pandemic.

She did acquiesce that inflation is “a risk that we have to consider,” but added, “I’ve spent many years studying inflation and worrying about inflation. And I can tell you we have the tools to deal with that risk if it materializes.”