PROVIDENCE – Six years and a devastating health and economic crisis separate U.S. Treasury Secretary Janet Yellen’s two addresses to the Greater Providence Chamber of Commerce.
While the world has changed drastically since Yellen last addressed Chamber members at a May 2015 event, not all those changes have been bad.
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In a virtual address at the Chamber’s annual meeting on Monday night, Yellen pointed to improvements in unemployment rates and GDP as evidence that the country is, by some measurements, in better shape than it was six years ago.
Indeed, the national 4.6% unemployment rate as of October is the lowest it’s been since before the pandemic hit, and even below the 5.5% unemployment in May 2015.
“The truth is, we remembered many of the lessons from the financial crisis and tried to do right this time what I would say we did wrong after the financial crisis,” Yellen said.
Among the biggest lessons learned: the importance of government relief. Yellen credited the trillions of federal stimulus dollars awarded to state and local governments, businesses and consumers as the chief reason why the post-pandemic recovery has occurred much quicker than the recovery following the 2008 financial crisis.
“It’s not just the passage of acts, but their effective implementation,” she said.
Still, challenges remain. Inflation, supply chain shortages and a tight labor market are still dragging down the economy.
Yellen remained optimistic, however, that these challenges are pandemic-related and will subside as health concerns abate and normal consumer spending patterns resume.
“Turning the economy back on after such a shock, it’s not like flicking a light switch and imagining everything was going to be smooth,” Yellen said.
She predicted inflation rates will drop to a more normal 2%-3% and supply chain strains will ease by the second half of 2022.
As for the nationwide workforce shortage, it’s certainly creating headaches for firms. But on the worker side, it’s not necessarily a bad thing, Yellen said.
The labor supply problem has forced many companies to increase wages, especially for the lowest-earning workers who have not seen pay keep pace with the cost of living. And despite the higher costs for businesses, many are still turning a profit, Yellen said.
What happens in Washington, D.C., will prove crucial to determining the country’s future, including the fate of the Build Back Better Act now before the U.S. Senate, Yellen said. Both Yellen and U.S. Sen. Jack Reed, D-R.I., who also spoke during the Chamber event, emphasized the benefits of the legislation for working families challenged by skyrocketing health and child care costs.
“This is the social infrastructure that will move us from the industrial age to the cyber age,” Reed said.
Not to be discounted is the policy set by the country’s central bank. President Joe Biden’s announcement earlier Monday to re-nominate Federal Reserve Chairman Jerome Powell signals a consistent monetary policy that will be important to continued recovery, said Alden Anderson, chairman of the Chamber’s board of directors and senior vice president for CBRE Inc.
Anderson was joined by Meghan L. Hughes, president of the Community College of Rhode Island and incoming Chamber board chair, and Rick Metters, Fidelity Investment Inc.’s vice president of Rhode Island regional public affairs and corporate community relations, for a panel discussion moderated by Chamber President Laurie White.
All three panelists shared Yellen’s rosy outlook both nationally and in Rhode Island pointing to local signs of economic health such as Fidelity’s plans to hire 850 employees at its Smithfield offices.
Partnerships between local employers such as Fidelity with the state and higher education institutions to train and hire the next generation of workers will play a critical role not only in the pandemic recovery but in shaping Rhode Island’s future in a post-pandemic world, Hughes said.
“Rhode Island does it better than just about any other state I can think of,” she said.
While Yellen’s address did not mention much of Rhode Island specifically, her ties to the Ocean State are strong.
She graduated in 1967 with an economics degree from Pembroke College, which was the women’s college of Brown University before it merged into Brown in 1971, which was the same year she received her doctorate in economics from Yale University.
Yellin described her formative years at Brown as the start of her passion for economics.
“I might not have ended up at the Treasury otherwise,” she said.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
