In recent weeks, the attention of investors and the fluctuation of stocks on global stock markets have mainly responded to signals from the Federal Reserve (US central bank) about the beginning of the monetary tightening cycle in the United States.
The rate hike in the world’s largest economy comes on the heels of persistent inflationary pressure, the result of an economy in strong traction since mid-2020.
During participation at the World Economic Forum this Friday (21), Janet Yellen, US Treasury secretary, said that, given the heated moment of the economy, inflation levels are at the highest levels since the 1980s.
“The pace of recovery in the US economy has surpassed even the most optimistic expectations, largely due to the rapid advance of vaccination and the government’s plan to help families, businesses and states,” Yellen said, adding that about 6 million cases were created. job vacancies last year in the US, and that the job market looks healthy, with no sign of deterioration in the short term.
She also said that the movement of recovery of economic activity remains robust, with estimates pointing to a growth of 5.3% in the US GDP (Gross Domestic Product) in 2021, and 3.3% in 2022.
According to the US Treasury secretary, the coronavirus pandemic and bottlenecks in production chains will not be enough to prevent the economy from continuing to recover.
Yellen also said the economic forces that have kept interest rates low in recent decades will continue after the pandemic is over, which will help keep US debt manageable.
She said that while the US debt-to-GDP ratio is higher than in the past, the interest burden “is very manageable.”
The Biden administration’s fiscal policies, which combine additional spending plans with tax increases, are “designed to ensure that these interest payments remain manageable and that the debt-to-GDP ratio stabilizes at manageable levels over the long term.”
The secretary also pointed out that the Biden administration is looking for strategies to alleviate inflationary pressures and renamed its economic agenda the “modern supply-side economy” to increase the supply of labor.
“The modern supply-side economy seeks to stimulate economic growth by boosting labor supply and increasing productivity, while reducing inequality and environmental damage,” Yellen said. “Essentially, we’re not just focused on achieving a high number of growth that’s unsustainable — we’re pursuing inclusive, green growth.”
with Reuters
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