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HomeWorldYellen says US economy on 'right track,' more jobs, private investment

Yellen says US economy on ‘right track,’ more jobs, private investment

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Treasury Secretary Janet Yellen on Monday argued that the Biden administration’s economic policies have been successful and are driving a boom in private-sector investment in the United States and powering historic job growth.

Yellen underscored the importance of the climate-focused Inflation Reduction Act, which marks its anniversary on Wednesday, especially in a summer that has made headlines with record heat and climate change-related disasters.

“It’s our nation’s boldest-ever climate action. And it is beginning to spark an economic renaissance in communities that had been left behind,” Yellen said at a union facility in Las Vegas, after touring a training center where workers are learning skills to work on clean-energy projects.

Yellen’s visit to Nevada, likely to be a battleground state in the 2024 presidential election, is part of a blitz by President Joe Biden and his cabinet to sell the successes of the IRA, a bipartisan infrastructure law and the CHIPS and Science Act to voters.

Nevada’s economy, which is heavily service-driven, has recovered from the pandemic, but its unemployment rate of 5.4 percent is the highest of the 50 U.S. states, according to June data from the nonpartisan public officials’ Association the National Conference of State Legislators.

The U.S. economy has outrun recession warnings with record-low unemployment, strong wage gains and better-than-expected GDP growth, but many voters who backed Biden in 2020 think the economy has fared poorly, and may not vote for him in the 2024 election, a recent Reuters/Ipsos poll showed.

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Yellen told members of the International Brotherhood of Electrical Workers (IBEW) trade union that overall inflation and the unemployment rate had both dropped below 4 percent, and that the U.S. economy was continuing to expand.

“Workers are better off than they were last year. Real average hourly earnings have grown over the past year – meaning that wage gains are outpacing inflation,” she said.

Yellen said the U.S. economy is on the “right track” as it continues to transition from rapid recovery to stable growth, although it was important to remain vigilant about potential challenges, particularly abroad.

“I still believe that there is a path to continue reducing inflation while maintaining a healthy labor market,” she said, adding that consumer sentiment was now at its highest level in almost two years.

She said over 13 million jobs had been created since Biden took office and the share of prime-age Americans – those between ages 25 and 54 – participating in the workforce had reached its highest level in over 20 years.

The share of prime-age female workers currently working was the highest it has ever been, Yellen said, adding that unemployment rates for Black and Latino Americans were also among the lowest on record.

“These are not abstract statistics,” Yellen told the IBEW members in prepared remarks. “These are real Americans back at work – able to put food on the table, support their families, and save for retirement.”

IRA’S IMPACT ON LOW-INCOME COMMUNITIES

Yellen said the IRA was delivering on a key goal – to revitalize communities that suffered industrial decline or were left behind – through targeted bonuses. A Treasury analysis showed that investments in clean energy, electric vehicles and batteries under Biden’s watch had been concentrated in counties that had lagged the country in earnings, college graduation rates, and child poverty rates, she said.

She also touched on the challenges of transitioning away from fossil fuels, one of the goals of the IRA, which includes $500 billion in new spending and tax breaks that aim to boost clean energy, reduce healthcare costs and increase tax revenue.

Taxpayers will not claim the credits until next year when they file tax returns, but a Treasury official said the private sector has announced over $110 billion in new clean-energy investments since the bill’s passage.

Yellen emphasized the continuing resilience of the U.S. economy and the rebuilding of the U.S. manufacturing base, despite predictions by some that the economy would slip into recession.

She said U.S. efforts to build a diversified clean-energy supply chain were critical to “reduce chokepoints, mitigate disruptions, and protect our economic security” given the risks posed by over-concentration of key inputs such as batteries, solar panels and critical minerals in a handful of countries.

She named no countries, but a recent report by the International Energy Agency said China holds at least 60% of the world’s manufacturing capacity for most mass-manufactured technologies, such as solar photovoltaic and wind systems, and 40% of electrolyser manufacturing.

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