WASHINGTON (AP) – Treasury Secretary Janet Yellen said Thursday the global pandemic and Russia’s incursion into Ukraine underscore the possibility of large economic shocks in the future, adding that downturns “are likely to continue to challenge the economy.”
Her speech to the Brookings Institution drew on lessons learned from past economic downturns, saying countries need to build in “recession funds” to protect people in the US and around the world.
Because “big negative shocks” are inevitable, she said, policymakers have learned from the Great Recession that ending economic downturns “as soon as possible” is imperative.
“Countries will do better when their economies are more resilient and less vulnerable,” she said. “A better understanding of supply chain disruptions, rising commodity prices, asset bubble bursts, and labor and productivity shocks can help policymakers enact reforms that strengthen our economic resilience.”
Recent years have been marked by a global pandemic that has prompted both the Trump and Biden administrations to spend trillions of dollars in government stimulus funds that economists say have contributed to the highest rates of inflation in four decades. And now the war in Ukraine is having a major impact on global energy, food and other commodities prices.
The Conference Board consumer confidence index fell slightly in April.
Calling for more permanent home security assistance for renters and homeowners, Yellen welcomed recent improvements to the unemployment insurance system and stimulus payments, and stressed the importance of US “recovery policies that shorten the length of recessions and ease economic pain.”
She furthered the Biden administration’s efforts to reduce America’s dependence on fossil fuels and push for greater energy independence.
“These shifts will mitigate our future vulnerability to oil price shocks,” she said. “At the same time, they will encourage the transition to cleaner energy sources that will, in due course, reduce the risks associated with natural disasters and climate change.”