WASHINGTON (Nexstar) — Treasury Secretary Janet Yellen said the US economy is recovering much faster than expected but officials warn progress could be thwarted by the pandemic.
Yellen said the country’s economic recovery is remarkable. “We’re averaging half-a-million new jobs per month since January. GDP now exceeds its pre-pandemic levels,” she told a Senate committee Tuesday morning.
But Fed Chair Jerome Powell said the pandemic could still reverse that progress after the detection of the omicron variant.
“Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply chain disruptions,” Powell said, which could fuel more price increases.
“Supply chain problems have made it difficult for producers to meet strong demand, particularly for goods,” he told the Senate committee. “Increases in energy prices and rents are also pushing inflation upward.”
Powell added most experts still believe inflation will decrease significantly over the next year. In an effort to help ease inflation, the Fed may stop its aid to the bond market sooner than expected.
Officials are also concerned about the harm that will come if Congress failes to increase the nation’s debt limit in the next 2 weeks.
“We will eviscerate our current recovery,” Yellen said. “In a matter of days the majority of Americans would suffer financial pain.”
Not increasing the debt limit could mean Social Security recipients and military members won’t get paid and eventually could lead to a deep recession, she said.
Yellen also urged the Senate to pass President Biden’s Build Back Better plan. She said it will help end the child care crisis and get more parents back to work.