U.S. Economy Is Not Overheating, Says U.S. Treasury Secretary, Janet Yellen

Speaking in Ireland on Monday, U.S. Treasury Secretary Janet Yellen said even though the United States is still five million jobs short of what the labor force was before the COVID pandemic, the country's economy is currently not overheating. "I would not say the US economy is currently overheating, we're still 5 million jobs below where we were pre-pandemic, and labor force participation has declined, and the reasons relate to the pandemic," said Yellen.

When the economy overheats, some producers are not able to supply all the goods that consumers demand because the economy is expanding at an unsustainable rate.

While speaking in the press conference she had with the finance minister of Ireland, Paschal Donohoe, she talked on some points, including an increase in prices and shortages causing inflation in the United States. This is not a cause for alarm for the Treasury secretary as she believes inflation in the US is transitory. "In the US, demand for durable goods has surged by more than 30 percent, and that's combined with pandemic closures in parts of the world where we are reliant for supplies of semiconductors and other products. It's led to a series of bottlenecks, boats lined up at ports, shortages of semiconductors have constrained vehicle production, and it has led to price increases."

"In the US, demand for durable goods has surged by more than 30 percent, and that's combined with pandemic closures in parts of the world where we are reliant for supplies of semiconductors and other products. It's led to a series of bottlenecks, boats lined up at ports, shortages of semiconductors have constrained vehicle production, and it has led to price increases," Yellen explained further.

She also mentioned she believes the rapid increase in inflation than the recent years and the lack of enough labor can be linked to the COVID-19 pandemic and lack of adequate childcare. The labor situation will improve, and more people will join the labor force as the pressure of the pandemic starts to reduce and become controllable. "I believe as we get beyond the pandemic, that these pressures release and in that sense, I believe inflation is transitory, and we don't have an economy that is in a longer-run sense overheating," Yellen said.

During the press conference, she also expressed interest in investing in Ireland, recommending Ireland as one of the best places in the world for multinational companies to invest in.