US Secretary of the Treasury Janet Yellen said that she expects price increases to remain high through the first half of next year, but rejected criticism that the US risks losing control of inflation.
Inflation is expected to ease in the second half as issues ranging from supply bottlenecks, a tight US labor market and other factors arising from the COVID-19 pandemic improve, Yellen said on CNN’s State of the Union on Sunday.
The current situation reflects “temporary” pain, she said.
Photo: AFP
“I don’t think we’re about to lose control of inflation,” Yellen said, pushing back on criticism by former secretary of the Treasury Lawrence Summers this month. “Americans haven’t seen inflation like we have experienced recently in a long time, but as we get back to normal, expect that to end.”
On Friday, US Federal Reserve Chairman Jerome Powell sounded a note of heightened concern over persistently high inflation as he made clear that the central bank would begin tapering its bond purchases shortly, but remain patient on raising interest rates.
Powell said that policies are “well-positioned” to manage a range of outcomes.
Yellen declined to say how she has advised US President Joe Biden on his decision whether to reappoint Powell, but she said that financial regulation “markedly strengthened” under Powell’s term, as it did during hers and under her predecessor, Ben Bernanke.
As the pandemic added stress to the financial markets, “the core of our financial system did very well because of the improvements in capital liquidity, risk management, stress testing,” Yellen said.
“Those improvements have stayed in place during the Powell regime,” she added.
US business economists are slightly less optimistic about growth prospects over the next year, as a number of threats persist, ranging from higher-than-expected inflation to lingering disruptions from COVID-19 and snarled supply chains.
Yesterday, the National Association for Business Economics (NABE) released a new report showing that 66 percent of NABE members responding to a survey expect the US economy to grow by 3 percent to 5.9 percent over the next year, while 28 percent were less optimistic, pegging growth over the next year at a far slower 0.1 percent to 2.9 percent.
Those results represented a downturn from the previous survey in July, which showed an identical 66 percent who believed that growth would be 3 percent to 5.9 percent, but 20 percent of those surveyed expected growth to come in at an even stronger 6 percent to 8.9 percent.
In the new survey, no NABE member saw growth higher than the 3 percent to 5.9 percent range over the next year.
On Thursday, the US government is to release its first look at economic growth, as measured by GDP, for the July-to-September quarter.
Economists are forecasting that GDP grew in the US at an annual rate of about 3 percent in the third quarter, a marked slowdown from growth rates of 6.1 percent in the first quarter and 6.7 percent in the second quarter.
The slowdown has been attributed to a surge in cases from the Delta variant of SARS-CoV-2 over the summer and supply chain problems, which disrupted manufacturing output in many sectors, especially auto production, and helped send consumer prices rising at the fastest pace in 13 years.
The NABE survey, which was conducted from Oct. 6 to Oct. 14, obtained responses from 91 NABE members.
Additional reporting by AP
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his