During an interview with WBUR’s “Here and Now” on Thursday, Treasury Secretary Janet Yellen responded to a question on lessons she learned for the future from the Biden administration inaccurately describing inflation as transitory by stating that “inflation has come down” and we’re 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 got it wrong when it suggested inflation would be transitory, would be fleeting. It was not and I still remember a business professor using this phrase that companies can extract failure value, they can learn from a setback. What have you learned for future policies about inflation and what happened?”
Yellen responded, “Well, inflation — first of all, inflation has come down. I think the word transitory suggests to many people that it’s something that’s a matter of days or weeks. And, in our economy, it lasted for over a year. So, I regret using the word transitory. But inflation has come down very substantially. The labor market is functioning well. We’ve had 23 months in a row — and this is the first time we’ve had this in more than 50 years — in which unemployment has been running under 4%. If you look at the last six months, as inflation’s come down, that gives you a better sense of where are we now and inflation’s now down to 2%. So, I have to say it’s very rare to have a period in which inflation comes down and the economy doesn’t experience a recession, but we’ve not seen that. And, in that sense, I consider this to be a soft landing.”
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