Exclusive: Janet Yellen On Whether Inflation Has Peaked, Risk Of Recession

[00:00:00] Speaker 1: When voters head to the polls in two weeks, the economy will be a very big factor. So this morning, I got a chance to sit down with Treasury Secretary Janet Yellen for an exclusive interview and began by asking her where our economy is headed next. [00:00:17] Janet Yellen: The labor market is very strong in very good shape, but inflation is way too high. And that's become our top immediate priority economically to get that down because it's really harming households. [00:00:33] Speaker 1: Is it working? Because we're raising rates really fast and inflation remains really hot. [00:00:40] Janet Yellen: So the Fed is the main policy institution that deals with inflation. You could have a point of view on it. Well, I think they recognize that it's important to get inflation down. They want to make sure that they deal with it rapidly enough that it doesn't become entrenched in the economy. And I have confidence that inflation will come down over the next year or two. So I believe that what they're doing will work. Do you believe it's peaked? MS. So I'm not positive. I don't want to forecast month by month inflation numbers. The most recent data suggests we still have inflation that's unacceptably high. But there are good indications earlier in the pipeline that inflation will come down. There's been a lot of pressure in the job market. two job openings for every person who's looking for work. The Fed is trying to take some of the heat out of the labor market, but, well, maintaining its strength. And I personally believe there is a path by which inflation can come down to comfortable levels while maintaining a strong job market. Are we on that path? MS. So far, I would say yes. Although, you know, we've not seen inflation come down, but I think we're on a path to bring it down. The administration has been working with Congress to supplement what the Fed's doing. So we've had releases of oil from the Strategic Petroleum Reserve, and that's helped to hold oil prices down. You know, of course, gas prices are higher, but they're well off their peak. Meanwhile, the Inflation Reduction Act that was passed will lower prescription drug prices, which is important for so many households, and also hold down health care premiums. [00:02:49] Speaker 1: MS. I want to dig into that in one second, but I want to talk sort of perception versus reality, because when I think about 2021, so many companies were doing so well. And all of a sudden, this year, just six months later, so many of those same companies are struggling. What happened so dramatically? [00:03:06] Janet Yellen: MS. Well, there's been a shift in the global economy. Many of these companies are selling their products not only in the United States, but globally. And the U.S. is probably the strongest part of the global economy. We've slowed down, but we're doing well, but many parts of the world are not. [00:03:30] Speaker 1: Where we are right now, we hear from business leaders every day, from a Jamie Dimon to a Jeff Bezos to brace ourselves, and a recession is coming. Do you believe it is, or are we in one right now? [00:03:42] Janet Yellen: MS. Well, when you have a 3.5% unemployment rate and have had over 300,000 jobs a month for the last three or four months or longer, that is not what most people think of as a recession. [00:03:59] Speaker 1: MS. Well, our credit card bills are going up, our household debt is going up, and life costs a lot, not to mention the price of our houses are going down. [00:04:09] Janet Yellen: MS. Well, interest rates are going up, and that's partly to address inflation. They have been very low for a very long time, and they're now rising to more moderate levels. So, yes, probably house prices will not continue to go up at the huge pace that they had been. But I think inflation will come down. People will feel better about the economy as that occurs. MS. So no recession? MS. I can't rule out the risk of one, but as I said, I believe there is a path toward bringing inflation down in the context of a strong labor market. [00:04:57] Speaker 1: MS. You were talking about, and you're traveling the country, talking about the economic accomplishments of this administration, inflation reduction, infrastructure spending, the CHIPS Act. These are huge wins, but are there tangible things that voters can feel today? In this world of short-termism, it's a very challenging thing to convince people this is going to be a great thing. You just got to wait for it. [00:05:22] Janet Yellen: MS. Infrastructure spending takes a while to get going, and there's an enormous program to improve bridges, roads, ports, airports. And there are communities across the country where you're seeing projects being completed and bridges are being reconstructed. There will be an enormous improvement in infrastructure. [00:05:49] Speaker 1: MS. What if you hadn't have made these investments, right? MS. There's lots of criticism that there was too much government support, but you can't make a bumper sticker that says it could have been worse. But that's kind of what the position that you're in. How do you convince the American people of that? [00:06:05] Janet Yellen: MS. Well, look, the American people know that they got the support they needed to get through a horrible pandemic. [00:06:15] Speaker 1: MS. Have they forgotten? Because many people across this country are really unhappy about the economy today. [00:06:20] Janet Yellen: MS. I think they're unhappy because inflation's high. And it's natural and it's understandable. It hit households where they notice it and it hurts. And they drive down the street and see signs for gas prices every day and are very sensitive to that. And the American people should know that the president is doing everything he possibly can to get that under control. [00:06:47] Speaker 1: MS. If Democrats do lose two weeks from now, with the economy being a top issue for voters, how much will the president's economic team have to shoulder some of the blame for that? [00:06:57] Janet Yellen: MS. Well, you know, we did the best we could and under extremely challenging circumstances. And I guess I would urge people to look around the world and look at how the U.S. is doing in comparison with all of our advanced country counterparts, where inflation is also extremely high. [00:07:24] Speaker 1: MS. Is your job going to get a whole lot harder in executing and implementing all of this if Republicans win? [00:07:30] Janet Yellen: MS. Well, much of what we accomplished actually was bipartisan. And we will continue to look for ways to work with Republicans on behalf of the American people. [00:07:42] Speaker 1: MS. Secretary Yellen, thank you for your time. You have a lot on your plate. Are you going to stay handling all of this post midterms? What is your future in this role? [00:07:52] Janet Yellen: MS. I plan to stay. I'm very excited about the president's economic program. There's a lot to implement. implement.