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Yellen ‘Confident’ Omicron Won’t Derail Economic Recovery

Yellen ‘Confident’ Omicron Won’t Derail U.S. Economic Recovery

Treasury Secretary Janet Yellen said she doesn’t expect the omicron variant of the coronavirus to disrupt the U.S. economic recovery.

“Yes, omicron has presented a challenge and will likely impact some of the data in the coming months,” Yellen said Wednesday in an address to the U.S. Conference of Mayors. “But I am confident it will not derail what has been one of the strongest periods of economic growth in a century.”

Yellen credited high vaccination rates in the U.S. and emergency spending by cities and states made possible by the Biden administration’s American Rescue Plan for preventing a more serious impact from the variant.

The ARP was a $1.9 trillion bill enacted in March that helped combat the virus and sustain households and businesses through the downturn it caused. But it’s also been blamed for helping to push inflation to its highest level in 40 years.

Economists marked down their growth forecasts for the first quarter of 2022 to 3% from 3.9% in a recent Bloomberg survey, citing the spread of omicron, but saw little impact beyond that quarter.

Spending Bill

Yellen also expressed optimism that the administration’s longer-term spending plan, known as Build Back Better -- which collapsed amid Democratic infighting in December -- will soon be revived, with many of its components intact.

“Congressional negotiations are ongoing regarding the Build Back Better legislation,” she said. “While we don’t know the final form this will take, it will revolutionize how we care for children in this country, invest in climate change and overhaul the international tax system to ensure corporations pay their fair share.”

©2022 Bloomberg L.P.