Yellen is avoiding the lessons learned from the wrong inflation: inflation has fallen
During an interview with WBUR’s “Here and Now” on Thursday, Treasury Secretary Janet Yellen responded to a question about the lessons she learned for the future from the Biden administration, inaccurately describing inflation as transitory by saying that ‘Inflation has fallen’ and we are having a soft landing.
Co-host Scott Tong asked: [relevant exchange begins around 7:20] “You have acknowledged that the Biden administration and the Federal Reserve were wrong when they suggested that inflation would be transitory, transitory. It wasn’t, and I still remember a business professor using this phrase: Companies can get the value out of failure, they can learn from a setback. What have you learned for future policy about inflation and what happened?”
Yellen responded, “Well, inflation – first of all, inflation has gone down. I think the word transient gives many people the impression that it is something that is a matter of days or weeks. And in our economy this took well over a year. So I regret using the word transient. But inflation has fallen very substantially. The labor market functions well. We have had 23 months in a row – and this is the first time in over 50 years – where unemployment has remained below 4%. If you look at the last six months where inflation has fallen, you get a better idea of where we are now and inflation is now down to 2%. So I have to say that it is very rare that there is a period where inflation is falling and the economy is not going through a recession, but we have not seen that yet. And in that sense I consider this a soft landing.”
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