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Yellen says to judge Biden stimulus on speed of return to pre-pandemic unemployment

Published 02/22/2021, 09:54 AM
Updated 02/22/2021, 11:00 AM
© Reuters. FILE PHOTO: Yellen holds a news conference in Washington

© Reuters. FILE PHOTO: Yellen holds a news conference in Washington

By David Lawder

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen said on Monday she will judge the success of President Joe Biden's coronavirus stimulus plan by how quickly it returns the economy to pre-pandemic levels of unemployment.

Speaking to a New York Times Dealbook online event, Yellen also played down the increased debt levels that would be incurred from Biden's $1.9 trillion American Recovery Plan being debated in Congress. She said that due to low interest rates, U.S. interest expenses as a share of GDP are at 2007 levels.

The current U.S. unemployment rate is 6.3%, compared with 3.5% before the pandemic - a level widely viewed as effectively full employment. But Yellen said that because 4 million people have dropped out of the labor force because of child care responsibilities during the COVID-19 pandemic, the effective unemployment rate is close to 10%.

"Success to me would be if we could get back to pre-pandemic levels of unemployment and see the re-employment of those who have lost jobs in the service sector, particularly - I would also consider them a measure of success."

Yellen said that if the federal government fails to spend the money necessary to get the economy quickly back on track, that will take a toll on U.S. fiscal soundness, citing the long, slow recovery from the 2008-2009 financial crisis.

"So by having a stronger economy, the money that's spent partially pays for itself," Yellen said.

She said traditional metrics in assessing debt, such as the 100% U.S. debt-to-GDP ratio, are less relevant in a very low interest rate environment.

A "more important metric" was interest payments on federal debt as a share of GDP, which at around 2% is no higher than in 2007, when interest rates were substantially higher.

© Reuters. FILE PHOTO: U.S. President-elect Joe Biden announces members of his economic policy team in Wilmington, Delaware

The Treasury is seeking to take advantage of those rates by issuing longer-term securities, Yellen said. Asked whether the Treasury would consider a 100-year bond, she said the market for that maturity would likely be "very tiny" with "limited interest."

Latest comments

the rush and desperation over the excessive stimulus is because a little more time and it will be clearly evident it is not necessary
further stimulus relief there than 600 bln is totally unnecessary. even the fed is saying the economy is in strong shape! yelling is in wall streets pocket
Yellen is nothing more than a leftist enabler
Janet: There is NO BENEFIT to having (millions more) people CONTINUE TO DESTROY THE ECOSPHERE. "Does "Climate. Crisis" mean anything to You ??
pre-pandemic economy wasn't in great shape at all. Now they see it as an achievment
There are many permanent change in labour market due to covid.
Hopefully.
Stop the Fed from buying government debt and see what happens to the interest rate they pay! It’s just one arm of the governement borrowing to the other with printed money...not hard to understand.
pre covid economy? Is that the roaring great economy we had before the Blue Flu (Chinese manufactured Covid) was drummed up as the smoke screen to rig an election thru unverifiable mail in votes? And destroying the economy was the only way to justify buying votes with a "stimulus" check?
Yellen, i have a news fladh for you: you at the helm of a sinking ship and all you are worried about are the deck chairs. Wake Up!
If inflation rates wont stay low what a criminal
when economy is changing in its squeleton, you never can expect having a quick change in unemployement. you cannot make a car factory average working being able to repair and maintain robots.or a truck driver repairing selfdriving vehicule. like we had coalmine, the shift with pandemia gives a complete new direction....and new job.
Maybe people will get their jobs back and the unprecedented inflation will also make them poor forever
not only them. remember the promises of trump that everybody will be rich. ...he forgot mentioning usd 10000.- the hamburger !
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