Posted 58 days ago
* Yellen made an appearance on the 'Late Show' with Stephen Colbert
* Host asked her about the causes of inflation
* She said during pandemic everyone stopped spending on services
* Instead 'they wanted to buy grills and office furniture'
Treasury Secretary Janet Yellen said a 'splurge' in spending by Americans shuttered inside their homes during the pandemic is what drove record inflation that followed.
She made the comment in an appearance on 'The Late Show with Stephen Colbert,' where she pointed to a rush to acquire consumer products amid a drop in normal spending habits on things like movies and concerts.
'So, normally you wouldn't expect just because you have a rapid recovery for inflation to rise very much, if at all,' she told the host, who asked her 'What happened, simply and clearly.'
The mere question drew a laugh, and Yellen called it 'a challenge' to answer.
Then she started describing the 'rapid recovery' from the pandemic when Biden took office.
'But it turned out the pandemic had very special impacts on the economy,' Yellen said. 'Remember everybody stopped spending on services.'
'They were in their homes for a year or more. they wanted to buy grills and office furniture. They were working from home. They suddenly started splurging on goods, buying technology,' Yellen continued.
'We [were] suddenly working through technology. And bottlenecks started developing where supply in particular important sectors of the economy just couldn't keep up with demand,' she said.
She spoke Wednesday, as new data is finally signaling a potential leveling off of inflation.
Stocks rose Wednesday when Federal Reserve Chair Jerome Powell signaled the Fed's aggressive rate hikes may slow. 'It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,' Powell said.... (Read more)