U.S. Department of the Treasury Secretary Janet Yellen said if President Joe Biden’s $1.9 trillion COVID-19 stimulus bill is passed, the economy could return to full employment as soon as 2022.
“There’s absolutely no reason why we should suffer through a long slow recovery,” Yellen said during an interview on CNN’s State of the Union. “I would expect that if this package is passed that we would get back to full employment next year.”
The latest unemployment report from the U.S. Labor Department showed that another month of rising COVID-19 cases left the U.S. unemployment situation virtually unchanged for the third month in a row, dropping just .4% to 6.3% in January. Total nonfarm payroll employment managed to gain by 49,000 in January, but is still 9.9 million below its February 2020 level.
Yellen stressed that without this stimulus, the unemployment rate could remain elevated for years to come, dropping to 4% by 2025.
During her confirmation hearing, Yellen previously told lawmakers that she believes now is the time for a big stimulus package, saying record low interest rates would allow Americans to invest more to better their futures in the long term.
“Neither the President-elect nor I propose this relief package without an appreciation for the country’s debt burden,” she said. “But right now, with interest rates at historic lows, the smartest thing we can do is act big.”
Economist in the housing space agree that the jobs market may take some time to recover. In a recent interview, Fannie Mae Chief Economist Doug Duncan told HousingWire the job market could be one of the last things to recover from recession brought on by the pandemic.
But whether Biden’s stimulus package could solve this problem remains to be seen. One expert is skeptical.
“FWIW (For what it’s worth), I guess this is conceivable, but something like one third of small businesses have failed during this pandemic,” housing analyst Brent Nyitray said in a note to his readers. “I don’t know that we have seen anything like that since the Great Depression, and I suspect it will take longer than a year or two to repair that damage. Most of these small business failures were retail, bars and restaurants.
“Their failures are then transmitted upwards to their commercial real estate landlords,” he continued. “But, remember Yellen is no longer a civilian, she is part of the Biden administration, so she is talking her political book. It is part of the job description, and you should take her pronouncements with a grain of salt.”
As Congress moves forward with the budget reconciliation method, which will allow Democrats to pass the stimulus bill on a simple majority, the House of Representatives said its goal is to pass the bill before the end of the month.