Evelyn Reynolds

Federal Reserve Vice Chair Lael Brainard told CNBC on Thursday that she doesn’t see the central bank taking a break anytime soon from its rate-hiking cycle.
“We’ve still got a lot of work to do to get inflation down to our 2% target,” she said.
Despite worries over inflation, Brainard expressed confidence otherwise in the economy.

Federal Reserve Vice Chair Lael Brainard said Thursday that it’s unlikely the central bank will be taking a break from its current rate-hiking cycle anytime soon.
Though she stressed that Fed policymakers will remain data-dependent, Brainard said the most likely path will be that the increases will continue until inflation is tamed.

“Right now, it’s very hard to see the case for a pause,” she told CNBC’s Sara Eisen during a live “Squawk on the Street” interview that was her first since being confirmed to the vice chair position. “We’ve still got a lot of work to do to get inflation down to our 2% target.”
The idea of implementing two more 50 basis point rate increases over the summer then taking a step back in September has been floated by a few officials, most notably Atlanta Fed President Raphael Bostic. Minutes from the May Federal Open Market Committee meeting indicated some support for the idea of evaluating where things stand in the fall, but there were no commitments.
In recent days, however, policymakers including San Francisco Fed President Mary Daly and Governor Christopher Waller have stressed the importance of using the central bank’s policy tools aggressively to bring down inflation running around its fastest pace since the early 1980s.
“We’re certainly going to do what is necessary to bring inflation back down,” Brainard said. “That’s our No. 1 challenge right now. We are starting from a position of strength. The economy has a lot of momentum.”
Economic data lately, though, has been mixed.

ADP reported Thursday that private payrolls increased by just 128,000 in May, the slowest month yet for a jobs recovery that started in May 2020. Labor productivity in the first quarter contracted at the fastest pace since 1947, and the Atlanta Fed is tracking an anemic 1.3% growth rate for second-quarter GDP, which contracted 1.5% in the first quarter.
Brainard said, however, that bringing inflation down remains the top priority and shouldn’t significantly harm an economy where household and corporate balance sheets are strong.
Markets already are pricing in two 50 basis point increases at the next meetings, which Brainard called “a reasonable kind of path.” Beyond that, though, “it’s a little hard to say,” she added, noting both upside and downside risks to growth.
In separate remarks, Cleveland Fed President Loretta Mester also said she sees consecutive 50 basis point moves ahead. While she noted that the Fed then can evaluate the progress made towards bringing down inflation, she said additional rate increases probably will be needed.
“In my view, with inflation as elevated as it is, the funds rate will probably need to go above its longer-run neutral level to rein in inflation,” Mester said in remarks to the Philadelphia Council for Business Economics. “But we cannot make that call today because it will depend on how much demand moderates and what happens on the supply side of the economy.”
In addition to the rate increases, the Fed in June has begun reducing the asset holdings on its nearly $9 trillion balance sheet. The process will entail allowing a capped level of proceeds from maturing bonds to roll off each month and reinvesting the rest.
By September, the balance sheet reduction will be as much as $95 billion a month, which Brainard said will equate to two or three more rate hikes by the time the process is finished.

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Private payrolls increased by just 128,000 in May, the lowest gain of the pandemic-era recovery, according to ADP.
Small business took the biggest hit during the month, as companies employing fewer than 50 workers reduced payrolls by 91,000.
Leisure and hospitality, the sector most hit most by restrictions and which has been a leader throughout the recovery, saw new hires of just 17,000.
Weekly jobless claims fell to 200,000, a sign that while hiring may be slowing, layoffs are not accelerating.

Job creation at companies decelerated to the slowest pace of the pandemic-era recovery in May, payroll processing firm ADP reported Thursday.
Private sector employment rose by just 128,000 for the month, falling well short of the 299,000 Dow Jones estimate and a decline from the downwardly revised 202,000 in April, initially reported as a gain of 247,000.

The big drop-off marked the worst month since the massive layoffs in April 2020, when companies sent home more than 19 million workers as the Covid outbreak triggered a massive economic shutdown.
By ADP’s count — which usually differs somewhat from government figures — payrolls had increased by nearly 500,000 a month over the past year.
May’s slowdown in hiring comes amid fears of a broader economic pullback. Inflation running around its highest level in 40 years, the ongoing war in Ukraine and a Covid-induced shutdown in China, which since has been lifted though with conditions, have generated fears that the U.S. could be on the brink of recession.
Small business took the biggest hit during the month, as companies employing fewer than 50 workers reduced payrolls by 91,000. Of that decline, 78,000 layoffs came from businesses with fewer than 20 employees.
“Under a backdrop of a tight labor market and elevated inflation, monthly job gains are closer to pre-pandemic levels,” ADP’s chief economist, Nela Richardson, said. “The job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late.”

In other economic data Thursday, initial jobless claims for the week ended May 28 totaled 200,000, a decline of 11,000 from the previous week and below the 210,000 estimate, according to the Labor Department.
Continuing claims fell to 1.31 million, the lowest total since Dec. 27, 1969, and indicative that while hiring may be slowing, the pace of layoffs looks muted.
Also, first-quarter productivity was revised slightly higher but still reflected a decline of 7.3%, the biggest tumble since 1947. Unit labor costs jumped by 12.6%, the biggest increase since the third quarter of 1982, according to the Bureau of Labor Statistics.
The biggest change in the ADP count came in leisure and hospitality, the sector most hit most by restrictions and which has been a leader throughout the recovery. May saw new hires of just 17,000, even as the summer tourism season gets set to hit full swing.
Education and health services led sectors with growth of 46,000, while professional and business services was next with 23,000 and manufacturing added 22,000. Service-providing jobs grew by 104,000, while good producers added 24,000.
Companies with 500 or more workers led with payroll gains of 122,000, while midsize firms contributed 97,000.
The report comes the day before the BLS issues its more closely followed nonfarm payrolls count, which is expected to show a gain of 328,000 following April’s 428,000. The unemployment rate is forecast to edge down to 3.5%, which would tie for the lowest since December 1969.
The BLS count includes government jobs, differing from ADP, which is a tally of private payrolls.

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As the Federal Reserve tries to rein in inflation without causing a recession, slower job creation and wage growth could be a plus.When it comes to the economy, more is usually better.Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession.But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades.Jerome H. Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Biden, who met with Mr. Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.”“We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.”But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress.“That’s the needle we’re trying to thread right now,” said Harry J. Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.”Economists disagree about the best way to strike that balance. Mr. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment, and that the Fed should therefore pursue a more cautious approach.But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines.“It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael R. Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.”Slower job growth could be good (or bad).The jobs report for May, which the Labor Department will release on Friday, will provide a case study in the difficulty of interpreting economic data right now.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Measuring Inflation: Over the years economists have tweaked one of the government’s standard measures of inflation, the Consumer Price Index. What is behind the changes?Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Interest Rates: As it seeks to curb inflation, the Federal Reserve began raising interest rates for the first time since 2018. Here is what that means for inflation.Ordinarily, one number from the monthly report — the overall jobs added or lost — is enough to signal the labor market’s health. That is because most of the time, the driving force in the labor market is demand. If business is strong, employers will want more workers, and job growth will accelerate. When demand lags, then hiring slows, layoffs mount and job growth stalls.Right now, though, the limiting factor in the labor market is not demand but supply. Employers are eager to hire: There were 11.4 million job openings at the end of April, close to a record. But there are roughly half a million fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs.The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists aren’t sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand.A coffee shop advertised open positions in New York. The limiting factor in the labor market is not demand but supply.Amir Hamja for The New York TimesMost forecasters expect the report on Friday to show that job growth slowed in May. But that number alone won’t reveal whether the mismatch between supply and demand is easing. Slowing job growth coupled with a growing labor force could be a sign that the labor market is coming back into balance as demand cools and supply improves. But the same level of job growth without an increase in the supply of workers could indicate the opposite: that employers are having an even more difficult time finding the help they need.Many economists say they will be watching the labor force participation rate — the share of the population either working or looking for work — just as closely as the headline job growth figures in coming months.“One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.”Wage growth may need to slow.Another number will be getting a lot of attention from economists, policymakers and investors: wage growth.Employers have responded to the hot competition for workers exactly the way Econ 101 says they should, by raising pay. Average hourly earnings were up 5.5 percent in April from a year earlier, more than twice the rate they were rising before the pandemic.Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable.“That’s something that we’re used to saying pretty unequivocally is good, but in this case it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5 or 6 percent per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2 percent target.Inflation F.A.Q.Card 1 of 5What is inflation? More

Most of the U.S. has been seeing just “slight or modest” economic growth over the past two months or so, according to the Fed’s “Beige Book.”
The report said most districts showed price increases rising at “strong or robust” pace.
The Fed is beginning its “quantitative tightening” program, which technically started Wednesday.

Most of the U.S. has been seeing just “slight or modest” economic growth over the past two months or so, according to a Federal Reserve report released Wednesday.
While all 12 Fed districts reported continued growth, the central bank’s periodic “Beige Book” indicated that four of the regions showed “that the pace of growth had slowed” during the previous period.

The report covers the period from mid-April through about May 22.
In addition to broader views on the economy, the report said most districts showed price increases rising at a “strong or robust” pace. While two districts said “rapid inflation was the continuation of a trend,” three said prices had “moderated somewhat.”
About half the districts reported that companies were still able to pass higher prices on to consumers, though some noted “customer pushback, such as smaller volume purchases or substitution of less expensive brands.”
“Surveys in two Districts pegged year-ahead increases of their selling prices as ranging from 4 to 5 percent; moreover, one District noted that its firms’ price expectations have edged down for two consecutive quarters,” the report stated.

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Also, the report noted some weakness in retail as rising prices bit into sales, as well as housing, which also is being affected by higher interest rates.

“Contacts tended to cite labor market difficulties as their greatest challenge, followed by supply chain disruptions,” the report said. “Rising interest rates, general inflation, the Russian invasion of Ukraine, and disruptions from Covid-19 cases (especially in the Northeast) round out the key concerns impacting household and business plans.”
The release comes as the U.S. faces a cloudy economic picture.
First-quarter GDP contracted at a 1.5% annualized pace, and the Atlanta Fed is tracking a second quarter expansion at a 1.3% rate.
And on Wednesday, JPMorgan Chase CEO Jamie Dimon warned of darker days ahead, advising analysts and investors to “brace yourself” against a confluence of factors.
One of Dimon’s biggest concerns is the Fed beginning its “quantitative tightening” program, which technically started Wednesday. The central bank is beginning to reduce the $9 trillion in assets it is holding on its balance sheet, a process that disrupted markets and raised growth concerns during its last iteration from 2017 to 2019.
This time around, the Fed is taking an even more aggressive approach, eventually allowing up to $95 billion a month in bond proceeds to roll off each month, starting in September. The initial phase of the program will see up to $47.5 billion roll off.
The Fed also is raising interest rates to combat the highest inflation the U.S. has seen in more than 40 years.
“Shrinking central bank balance sheets add another element of ambiguity to what is already a period of heightened uncertainty,” Jonas Goltermann, senior markets economist at Capital Economics, said in a note. “After all, QT is something of an experiment: it has only been tried once before in recent times. And central bankers generally seem a lot less sure about how their balance sheet policies affect the economy and financial markets than they are about the impact of raising or lowering interest rates.”
One important element that has kept the economy afloat has been the rapid pace of job gains.
The Beige Book noted that employment was up “modestly or moderately” across all districts, though there were some reports of a slowing or freeze in hiring.
“However, worker shortages continued to force many firms to operate below capacity. In response, firms continued to deploy automation, offer greater job flexibility, and raise wages,” the report said.

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Job openings fell by 455,000 in April, from an upwardly revised 11.855 million the previous month.
That helped close the gap between vacancies and available workers, which was 5.46 million.
Hirings and quits were little changed for the month.

A man walking a dog passes by a help wanted sign advertised along East Main Street in East Islip, New York on February 17, 2022.
Newsday LLC | Newsday | Getty Images

Job openings fell by nearly half a million in April, narrowing the historically large gap between vacant positions and available workers, the Bureau of Labor Statistics reported Wednesday.
The openings total declined by 455,000 from the upwardly revised March number to 11.4 million in April, about in line with the FactSet estimate, according to the bureau’s Job Openings and Labor Turnover Survey.

That left a gap of 5.46 million between openings and the available workers, still high by historical standards and reflective of a very tight labor market, but below the nearly 5.6 million difference from March. As a share of the labor force, the job openings rate fell 0.3 percentage point to 7%.
Policymakers at the Federal Reserve watch the jobs numbers closely for signs of labor slack. The shortage of workers has pushed wages sharply higher and fed inflation pressures running at their highest levels since the early 1980s.
“April’s JOLTS report shows the jobs market remains squeaky tight, with near-record job openings and layoffs hitting a record low,” said Robert Frick, corporate economist at Navy Federal Credit Union. “This almost guarantees another healthy employment report on Friday and means employers’ focus is on expansion despite high inflation and pending higher interest rates.”
However, the JOLTS report combined with a closely watched manufacturing reading to show a potential shift in the employment picture.

The ISM manufacturing index showed that firms on balance expect to cut back on the pace of hiring. Specifically, the employment component showed a reading of 49.6, the first sub-50 result since November 2020, according to Bespoke Investment Group.

Anything below 50 represents a reduction as the survey gauges business expansion against contraction. The headline ISM number was 56.1 for May, which was higher than April’s 55.4.
Despite the potential slowdown in manufacturing hires, worker mobility remains strong.
The JOLTS report showed that 4.4 million workers left their positions in April, little changed from the March reading and reflective of the ongoing “Great Resignation” that has seen unprecedented market movement amid the high demand for labor.
Hiring was little changed on the month, though there was a drop-off in the leisure and hospitality sector. The industry saw hiring decline by 77,000, or a half percentage point fall to 7.2%. A year ago, the hire rate was 9%.
The numbers came two days ahead of the pivotal nonfarm payrolls report for May. The Dow Jones estimate is for 328,000 more jobs added, following a gain of 428,000 in April, and the unemployment rate to drop to 3.5%.

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San Francisco Fed President Mary Daly said she backs raising rates aggressively until inflation comes down.
“We need to do that expeditiously, and I see a couple of 50 basis point hikes immediately in the next couple of meetings to get there,” Daly told CNBC.
Daly said she sees some initial signs of a slowing economy and reduced inflation, but will need to see much more progress before the Fed can taper its efforts.

San Francisco Federal Reserve President Mary Daly said Wednesday she backs raising interest rates aggressively until inflation comes down to a reasonable level.
Those moves likely would entail multiple 50 basis point hikes at coming meetings, then a possible rest to see how the central bank policy tightening is combining with other factors in addressing the massive surge in consumer prices.

“We need to do that expeditiously, and I see a couple of 50 basis point hikes immediately in the next couple of meetings to get there,” she told CNBC’s Steve Liesman during an interview on “TechCheck.” “Then we need to look around and see what else is going on.”
Daly said she sees some initial signs of a slowing economy and reduced inflation, but will need to see much more progress before the Fed can taper its efforts.
“We aren’t really there yet, so we need to see those data on a slowing economy bringing demand and supply back in balance, and I need to see some real progress on inflation,” she said. “Otherwise, I would think we just move the rate until we find ourselves at least at neutral and then we look around to see what else needs to be done.”
So far this year, the Fed has enacted two rate increases totaling 75 basis points, including a 50 basis point increase in May. A basis point equals 0.01%
Multiple officials have said the 50 basis point moves are likely to continue despite the fact the central bank usually prefers a per-hike increase of 25 basis points. Though inflation measures such as the consumer price index and the Fed’s preferred core personal consumption expenditures have come off their recent highs, they are still near levels last seen in the early 1980s.

“I don’t meet anyone, contacts, consumers, anyone, who thinks the economy needs help from the Fed right now,” Daly said. “I certainly am comfortable to do what it takes to get inflation trending down to the level we need it to be. I really think these inflation numbers have been going on too long, and consumers, businesses and everyday Americans are depending on us to get inflation back down and bridling it.”
How far Daly and the rest of the Fed are willing to go remains to be seen, and she said that data will dictate how high rates trend.
Most Fed officials estimate the “neutral” level of their benchmark borrowing rate to be around 2.5%. It currently is targeted in a range between 0.75% and 1%.
Daly said issues such as supply chain backlogs, the war in Ukraine and China’s economic reopening after a Covid-related shutdown will be factors on whether inflation has peaked. If she doesn’t see progress, “we need to go into restrictive territory,” she added.

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The labor market may be cooling off, but not by much, according to new data on job openings and turnover.Employers had 11.4 million vacancies in April, according to the Labor Department, down from a revised total of nearly 11.9 million the previous month, which was a record.The April vacancies represented 7 percent of the entire employment base, and left nearly two available jobs for every person looking for work, reflecting continued high demand for labor even as the Federal Reserve begins to tamp it down.The number of people who left their jobs was steady, at six million, also close to the highest number ever recorded, as was the number of people hired, at 6.6 million. The data, gathered on the last business day of April, was reported Wednesday in the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report.Employment gaps remain largest in the services sector, where consumers have shifted more of their spending as pandemic restrictions have eased, but they are shrinking. The leisure and hospitality industry had a vacancy rate of 8.9 percent, for example, down from 9.7 percent in March.The State of Jobs in the United StatesThe U.S. economy has regained more than 90 percent of the 22 million jobs lost at the height of pandemic in the spring of 2020.April Jobs Report: U.S. employers added 428,000 jobs and the unemployment rate remained steady at 3.6 percent ​​in the fourth month of 2022.Vacancies: Employers had 11.4 million vacancies in April down from a revised total of nearly 11.9 million the previous month, which was a record.Opportunities for Teenagers: Jobs for high school and college students are expected to be plentiful this summer, and a large market means better pay.Higher Interest Rates: Spurred by red-hot inflation, the Federal Reserve has begun raising interest rates. What does that mean for the job market?The construction and manufacturing industries, however, had the greatest surge in openings. Both reached record highs, showing that demand for housing and goods hasn’t slowed enough to make a dent in available jobs.Wages have escalated rapidly in recent months as employers have competed to fill positions, peaking in March at a 6 percent increase from a year earlier, according to a tracker published by the Federal Reserve Bank of Atlanta. Although not quite fast enough to keep up with inflation, growth has been stronger for hourly workers and those switching jobs. The millions of workers quitting each month tend to find new jobs that pay better, data shows.Employers have struggled to bring workers back from the pandemic, which initially sent labor force participation down to levels not seen since the 1970s, before a wave of women entered the workplace. The economy remains more than a million jobs under its peak employment level in February 2020.Steve Pemberton, chief human resources officer for the employee benefits platform Workhuman, said his firm’s clients gave out 50 percent more monetary awards to their employees in 2021 over the previous year in an effort to increase retention. But he doubts that work force participation will ever reach its prepandemic level given the options available outside traditional employment.“You can’t gig your way to a living wage in some parts of the country,” Mr. Pemberton said. “But for the overwhelming majority of the work force, they might say, ‘Going back to being a full-time employee isn’t something I’m going to do; I’ve found a way to make a living with multiple jobs.’” (The JOLTS report does not capture those working as independent contractors.)Layoffs declined to a low of 1.2 million, indicating that employers are hanging on to as many workers as they can. That number fits with new claims for unemployment insurance, although they’ve been rising since reaching a half-century low in March.Over the weekend, Christopher J. Waller, a Federal Reserve governor, gave a speech explaining how he hoped interest rate increases would slow inflation: by shrinking the number of vacancies without putting too many people out of work.“The unemployment rate will increase, but only somewhat because labor demand is still strong — just not as strong,” Mr. Waller said. “And because when the labor market is very tight, as it is now, vacancies generate relatively few hires.” More

Treasury Secretary Janet Yellen told CNBC that the White House has several strategies that will reduce inflation she conceded is too high for Americans.
In a separate interview Tuesday, Yellen admitted she was wrong when she called inflation “transitory” last year.

Treasury Secretary Janet Yellen emphasized that the White House has several strategies ready to go that will reduce an inflation burden she conceded is too high on Americans.
In an interview Tuesday with CNBC’s Becky Quick, Yellen listed efforts aimed at prescription drug costs, the budget deficit and oil production that could bring down prices running near the fastest pace since the early days of the Reagan administration.

The remarks came the same day President Joe Biden met with Yellen and Federal Reserve Chairman Jerome Powell, whose institution has begun fighting inflation with interest rate hikes.
“The president emphasized his intention to do everything he can to lower the costs that Americans face for important items in their budget,” Yellen said in describing the meeting. She noted “prescription drugs, for utility bills, things where the president acting on his own or working with Congress can make a difference, and also his support for deficit reduction.”
In both a statement before the meeting and an op-ed piece for The Wall Street Journal, Biden stressed the Fed’s role in bringing down prices.
The Journal piece specifically said, “First, the Federal Reserve has a primary responsibility to control inflation.” Meanwhile, Yellen — who was Powell’s immediate predecessor as head of the central bank — also noted that responsibility.
“The Fed has a dual mandate and it is maximum employment and price stability. I think that’s the way it’s phrased in the law,” she said in the interview that aired Wednesday on “Squawk Box.” “But we are at full employment. We have a very strong labor market. That’s been achieved, but inflation is way too high, and it’s really a big burden on American households. And so maintaining full employment while bringing inflation down, that’s the president’s priority and I believe that’s consistent with how the Fed sees its programs.”

For its part, the Fed has approved two rate hikes this year totaling 75 basis points. Officials have indicated that additional 50 basis point increases are likely over the next several meetings, after which the central bank can evaluate the impact that monetary policy tightening is having.
Both Powell and Yellen spent much of 2021 saying inflation was “transitory” and likely to abate once Covid pandemic-specific factors such as supply chain problems and outsized demand for goods over services returned to normal.
In a separate interview Tuesday, Yellen admitted she was wrong.
“I think I was wrong then about the path that inflation would take,” she told CNN’s Wolf Blitzer. “There have been unanticipated and large shocks that have boosted energy and food prices, and supply bottlenecks that have affected our economy badly that I … at the time, didn’t fully understand.”
In the CNBC interview, Yellen said a spending package “could very well have reductions on the costs of prescription drugs that would make a difference to every family that has drug costs as part of its household budget.”
While she said that “could make a difference very quickly,” most of the administration’s plans likely would take longer to filter through the economy.
Biden has frequently blamed the Russian attack on Ukraine for record-high gasoline prices, but energy costs were already climbing sharply higher before the war. The administration also has said energy companies are sitting on thousands of oil leases that could allow greater production, though those leases likely would take years to develop.

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