(Reuters) – U.S. Treasury Secretary Janet Yellen on Thursday said the U.S. employment picture increasingly resembles the job market that existed prior to the COVID-19 pandemic, and slowing wage growth is not a threat to add to inflation.
“The labor market has become a little less hot, a little bit more normal. The number of job openings has declined some. We’ve had a burst in labor force participation,” Yellen said in an interview with CNBC.
“And so the labor market now is resembling what it looked like pre-pandemic. Wages are increasing but at a slower rate. And so that doesn’t really look like it’s a threat to inflation,” Yellen said.
Yellen, who is in New York to press the case for President Joe Biden’s economic agenda in a speech to business and Wall Street leaders, said a substantial part of remaining inflation that needs to come down is in housing markets, where recent drops in elevated rents are slower to take effect as leases roll over.
Higher costs of housing, education, health care and other necessities are affecting Americans’ view of the economy even though their wages have risen, she said.
Yellen added that even as inflation comes down, Biden will “continue to address the high cost of living whether it’s in allowing Medicare to negotiate drug prices down, capping the cost of insulin co-pays, doing what he can to bring down the cost of living.”
As leaders of the Group of Seven wealthy democracies meet in Italy, Yellen wrote an opinion piece in the New York Times on Thursday in support of her proposal for the G7 to back a loan to Ukraine that would be repaid by the earnings from some $300 billion in frozen Russian assets.
Yellen told CNBC that the Biden administration’s view is that it is “legal, moral and economically reasonable to seize the assets,” but acknowledged Europe’s reluctance to take that step.
“What we’re looking for is to keep the allies together to find a way to do something jointly in a way that is agreeable to all of the partners who have been supporting Ukraine.”
She said the loan proposal unlocks the economic value in the assets and gives it to Ukraine to help it fight Russia’s invasion.
It is a “meaningful amount, the number that is being discussed is something like $50 billion and this could be repeated,” she said.
(Reporting By Dan Burns and David Lawder; Editing by Toby Chopra and Paul Simao)
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