(NewsInsights.org) – Treasury Secretary Janet Yellen tried to quell investor and consumer fears in June 2021, nearly 16 months into a roughly two-year-long pandemic, as the economic consequences of shut-downs, supply chain disruptions, and a massive unemployment spike that rivaled the Great Depression rattled the nation. Amidst those conditions, Yellen confidently stated that burgeoning inflation was simply transitory. In a recent exclusive interview with Fox Business correspondent Edward Lawrence, Yellen claimed to regret those comments.
In 2021, Yellen predicted that transitory inflation at around 3% might last throughout the remainder of the year. Yet, more than a year later, in June 2022, inflation peaked at a whopping 9.1% on the Consumer Price Index (CPI), a measure of the year-on-year price changes measured in monthly increments.
Inflation has subsided. It ticked down to between 3.2% and 3.7% in July through September 2023 and settled at a low of 2.2% in November. However, February’s jumps in gasoline and rent prices drove the CPI back up to 3.2%.
In her interview with Lawrence, Yellen confessed that she regretted “saying it [inflation] was transitory.” She pointed out that while inflation has come down, most people would interpret “transitory” to mean “a few weeks or months.” She readily admitted, “it’s lasted longer than that,” and it’s not over yet.
Yet, Yellen said she remained optimistic, noting that most experts predicted inflation would continue to decrease over time with a few bumps and hiccups along the way.
For example, the Treasury secretary explained that housing costs, like rent, are among the most significant contributors to inflation. Yellen said rents had slightly declined throughout much of the nation, which she interpreted as a good sign. However, she warned it takes time for rent data “to filter into the CPI.” She said, “I wouldn’t expect this to be a smooth path month to month, but the trend is clearly favorable.”
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