The Biden administration's spending on stimulus to keep the economy going during the COVID pandemic may have contributed a little bit to inflation, U.S. Treasury Secretary Janet Yellen said in an interview on CNBC on Wednesday.
Yellen said supply chain issues and shortages were the main factor driving up prices during the pandemic, but conceded that stimulus spending could have played a role as well.
"It may have contributed a little bit to the inflation, but by and large, inflation was a supply side phenomenon," Yellen said, in a rare concession by Biden administration officials about the role their policies played in driving up prices.
The Treasury secretary, who leaves office later this month, said she remained convinced that the spending had been needed to prevent scarring seen after previous downturns when business closures and layoffs result in people being unemployed for long periods and wind up becoming alienated from the workforce.
Price increases were largely due to shortages of goods coming from China and other countries that had also shut down, which left automakers and others with insufficient semiconductors and other components to produce goods.
Yellen said there had not been much progress in lowering prices in recent months, but she remained convinced that the U.S. was on a "downward path."
She said the labor market had cooled but was in a good state, and recent U.S. economic data suggested that interest rates could remain higher than people had expected.
But she said there was also increased uncertainty about the future of economic policies as President-elect Donald Trump prepares to take office on Jan. 20.
Overall, she said, the U.S. economy was doing very well, with solid consumer spending and investment despite higher interest rates.
Asked about the recent cyberattack on U.S. Treasury workstations by Chinese state-sponsored actors, Yellen said it was a "tremendous concern" and was not helpful to U.S.-Chinese relations.
Yellen said she raised the issue during a virtual meeting with Chinese Vice Premier He Lifeng on Monday, and Treasury would be briefing lawmakers about the attack.
"It's not something that builds confidence in our relationship, and we will and have taken action against perpetrators of cyber attacks from China and other countries," she said.
As for Nippon Steel's blocked acquisition of U.S. Steel, Yellen said President Joe Biden received a "thorough analysis" of the deal by an interagency national security review body.
Yellen said she could not discuss specifics of the review of the merger blocked by Biden last week that is now the subject of a lawsuit that alleges that the review by the Committee on Foreign Investment in the United States (CFIUS) was not conducted in good faith and was prejudiced by Biden.
"I think, as you know, there is ongoing litigation over this case, and as head of CFIUS, I regret there is very little substantive that I can say to you about this," Yellen said. "Other than that, CFIUS did analyze the specifics, as it always does of this situation, and prepared a thorough analysis to go to the president."