(Bloomberg) -- Treasury Secretary Janet Yellen said the labor market is no longer driving inflation in the US economy to the extent it was earlier in the pandemic recovery, echoing earlier comments by Federal Reserve chief Jerome Powell.
The job market was “initially very tight” during the post-Covid rebound, but “now we have a strong labor market, one with fewer pressures that would create inflationary concern,” Yellen told lawmakers on the House Financial Services Committee in Washington on Tuesday. She said the shift came after a surge in labor supply.
US unemployment edged above 4% in May for the first time in more than two years. In a separate hearing Tuesday, Powell told the Senate that recent job numbers “send a pretty clear signal that labor market conditions have cooled considerably,” and said the Fed's “likely direction” is toward cutting interest rates.
Yellen also described the tax cuts enacted by former President Donald Trump in 2017 as “costly” and “regressive,” when she was asked whether they'd contributed to the growing US national debt. Trump has promised more such reductions if he's elected for another term in November.
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