Full transcript: Treasury Secretary Janet Yellen on

Here is the complete transcript of Janet Yellen’s interview with Treasury Secretary Janet Yellen, which aired Sunday, November 14, 2021 on Face the Nation.

MARGARET BRENAN: Madam Secretary! Thank you so much for having me and for taking the time to speak with us. 

TREASURY SEECRETARY JANET YELLEN : Thank you for the invitation. 

MARGARET BRENNAN – You said that inflation will be with us for the second half next year. Are you optimistic that prices will drop for the average American by next November and Election Day 

SECRETARY YELLEN (Regarding the pandemic): It really depends on what it is. The economy and inflation have been controlled by the pandemic. If we want to lower inflation, I believe that it is essential to continue fighting the pandemic. It is important to recognize that the pandemic is responsible for this inflation. It almost shut down our economy. It increased unemployment to nearly 15%, and we’ve been opening up in fits-and-starts. The pandemic is responsible for the current inflation. It resulted in a dramatic increase of demand for-for products. Households were unable spend on services such as eating out and traveling. They changed as they stayed at their homes and worked more from home. They increased their spending on goods, which led to an increase in demand for products. Although the supply of goods has increased in the United States as well as globally, it is not as high as the demand. We all know that President Biden’s first priority after his election was vaccinations. He wanted to end the pandemic and get people working again. The American Rescue Plan was passed. If you think about what could have happened if it wasn’t for that, you will be amazed at how much unemployment has dropped from almost 15% down to below 5%. Americans are confident about the job market. Quits have risen to record highs, which indicates that people are getting more offers. They are also seeing wage increases. This is not something that had to happen. It really reflects the support we gave Americans to continue their spending and get through the pandemic. However, because of supply disruptions and the huge shift in-in demand towards products, we are now seeing broad-based price increases. We are experiencing shortages in semiconductors, which has caused new and used car prices rise and car production to fall. 

MARGARET BRENAN: Used cars up 26 percent year-over-year, gasoline up half a percent, eggs up 12%, milk 6% and coffee 6%. So what?  

SECRETARY YELLEN : We are witnessing some large increases in prices. 

MARGARET BRENNAN: When does it get better? When will those spikes stop?  

SECRETARYYELLEN: When the economy recovers sufficiently from COVID and the demand patterns improve, people eat out more, travel more and spend more money on services. Then, the demand for products and goods starts to return to normal. The pandemic also has impacted labor supply. The pandemic has impacted the labor force participation. It hasn’t recovered.  

MARGARET BRENNAN: Mhmm. 

SECRETARY YELLEN – Probably many people are still concerned about the health effects of working. There may be disruptions to child care arrangements. However, prices will likely return to normal if labor supply and demand patterns normalize. 

MARGARET BRENNAN : Because this could have a political cost, which is why i ask about November, obviously. 

SECRETARY YELLEN (Yes) Americans feel that there is an economic price. Americans notice when gas prices rise – they are now at an average of $3 per gallon in some places. It makes a difference. But it’s important to consider inflation in the context that an economy is improving from what it was right after the pandemic. 

MARGARET BRENAN: China’s leaders repeatedly requested that the Trump-era tariffs be lifted in order to provide short-term relief. Would it make things more affordable if the Biden administration did this? 

SECRETARY YELLEN : It would make a big difference. Tariffs can raise domestic prices. We placed those tariffs; President Trump and his administration did so as a retaliation against unfair trade practices. 

MARGARET BRENNAN: Should the couple stay put? 

SECRETARY YELLEN That’s definitely something that’s being considered. 

MARGARET BRENNAN – Also, on China, before we leave this space, there are concerns over toxic debt in China and a possible Lehman Brothers moment. How concerned are you about what’s happening inside China right now and the potential risk it poses for the rest of the planet? Are you confident China can control it? 

SECRETARY YELLEN (English): This is something that we’re closely monitoring. China has a realty sector, which is a realty sector that has overleveraged firms. This is something China is trying to address. China’s real estate sector is a key part of its economy. It accounts to 30% of China’s demand. A slowdown of China’s economy would have global consequences. China’s economy is huge, and if it slows more than expected, it could have global consequences for many other countries that are connected to China through trade. 

MARGARET BreNNAN: But they believe they can manage this risk right now? 

SECRETARYYELLEN: They are definitely trying to do that, and we’re closely watching it. 

MARGARET BRENNAN – When we discuss the supply side of the problem you are facing in the United States, does it fall to the private sector to unclog our supply chains? Is there anything you can do in the administration to help? 

SECRETARYYELLEN : In the short-term, we are doing everything we can to help unclog supply channels. The supply chain is largely private. However, sometimes it is necessary to coordinate actions in order to unclog supply channels. We have been speaking with port operators in Los Angeles, Long Beach, Savannah to try to understand why there is so much backlog of ships waiting for their goods to be offloaded in Long Beach, Los Angeles. We spoke to big retailers who were more inclined to leave their containers at ports than move them quickly. These ports have agreed to remain open 24/7, as the president-as-president, Biden announced. We’ve also spoken to retailers about moving their containers out to make more space. Similar discussions are underway in Savannah. There are ways that private-private parties can come together to better coordinate and work out how to alleviate some of these supply shortages. We are doing this. Even though this-this is mainly private, we’re not stopping at nothing.  

MARGARET BRENAN: It’s vital at this time of the year, of course. There are record numbers of job openings, as you mentioned earlier.  

SECRETARY YELLEN – That’s right.  

MARGARET BRENNAN : Yet, there’s a worker shortfall at the same moment. What’s the deal with the mismatch in supply and demande? 

SECRETARY YELLEN (English): First of all, the programs, such as the American Rescue Plan and CARES Act, were designed to help families and households get through this, so they didn’t have to take a large income loss. Americans feel confident about their finances. This is not an accident. They are spending a lot so there is strong demand despite the fact that the pandemic had a significant impact on our economy. It’s a good thing, because unemployment rose after the 2008 financial crash. It took a very long time to get down. 

MARGARET BRENNAN: -A decade.–  

SECRETARYYELLEN: -and household finances were decimated. This has not happened this time, so that’s a good thing. But spending is strong, and the supply of workers has not returned to normal.  

MARGARET BRENNAN: Right.  

SECRETARYYELLEN: People don’t have a job- the unemployment rate is low and participation in the labor market is very low compared to pre-pandemic. I believe part of it is related to COVID concerns and exposure to COVID, especially for jobs that involve public face activities. Partially, I think it is because childcare workers and educators are in short supply. This creates problems for childcare. This also tends to reduce labor supply. As I said, I believe that labor supply will return to normal once we have a grip on the pandemic. We have a tight labor force, not a loose one. The unemployment rate is now at 4.6 percent. As I said, the pandemic has caused an abnormally low labor supply. 

MARGARET BRENNAN : But there is a shortage in skilled workers in many areas. I’m asking if we are at a point where we need to increase immigration to meet this challenge. 

SECRETARY YELLEN (English): There are many issues involved in immigration. However, I believe that this is one reason we face shortages of certain types of workers. We’ve always had the problem of having more skilled workers available and decreasing opportunities for those with less skills. Therefore, it was important to continue focusing on education.  

MARGARET BRENAN: What would the economic recovery look without paid leave? 

SECRETARY YELLEN (English): I think we will have an economic recovery that is strong and will support continued growth. For some time, the United States has had a problem with labor force participation, particularly for women. In the past, the US had a higher female labor force participation than any other developed country. This is not true anymore. It is clear that the United States lacks support for its citizens working. 

MARGARET BRENNAN: Right.  

SECRETARY YELLEN – especially for women. Now, I am very optimistic and fully expect the Build back Better package to become law. 

MARGARET BRENAN: It was removed from the framework. 

SECRETARY YELLEN – –Yes, so 

MARGARET BRENNAN – It is unlikely to receive full support from the Senate. 

SECRETARYYELLEN: Paid-paid leaves are important and provide support for people who want to work. The package provides a lot of support for child care. It helps to make child-care more affordable for families so that they can spend less than 13% on child care. 

MARGARET BRENNAN: So I- 

SECRETARYYELLEN: There would be two more years of early education that would be universal, and a tax credit for children that would allow families to take good care and participate in the workforce. So I believe that the package will increase labor force participation, especially among women. Paid time is one component that could be added to that, but there are many things in that package that will make an impact. 

MARGARET BRENAN: You think that what’s in it is sufficient. Back in February, you said to me that women’s participation was down because they don’t have universal access to paid family and medical leaves and child care. Is it necessary for full economic recovery? 

SECRETARYYELLEN : Well, we-we’re supportive of paid leave, President Biden and me, and it’s something we will try and legislate in future. Although it doesn’t appear to be part of the package, there are many things in the package that will support labor force participation. This package includes money to improve home care for seniors with health issues. For disabled people. It’s a support that will make people work easier and take care of their loved ones. 

MARGARET BRENNAN : I’m told that we are running out of time. However, I want to quickly question you — the president is expected make his selection for Fed chair. Do you think Jerome Powell should be renominated as Fed chair? What is the importance of continuity?  

SECRETARYYELLEN – I’m going to leave it up to President Obama to make a decision. I’ve stated that I believe that Chair Powell has done a great job of managing the Fed and of addressing the issues that emerged when the pandemic hit. But it’s crucial that President Biden pick someone who’s credible and experienced. There are many candidates. 

MARGARET BRENNAN : Madam Secretary, thank you so much for taking the time to speak with us. There is so much more that we could discuss. 

SECRETARY YELLEN : Yes. Absolutely.  

MARGARET BRENNAN : We are grateful that you have us here. 

SECRETARY YELLEN (English): Thank you very much for your invitation. We are glad to have you.