Treasury Secretary Janet Yellen said the U.S. could see a return to full employment in 2022, though much depends on the implementation of the recently enacted $1.9 trillion coronavirus relief package.
Ms. Yellen said ahead of a House hearing on Tuesday that there are signs of economic recovery but that the country is still almost 10 million jobs down from pre-pandemic levels.
“With the passage of the Rescue Plan, I am confident that people will reach the other side of this pandemic with the foundations of their lives intact,” Ms. Yellen said in prepared testimony. “And I believe they will be met there by a growing economy. In fact, I think we may see a return to full employment next year.”
Ms. Yellen and Federal Reserve Chairman Jerome Powell are set to testify before the House Financial Services Committee as part of a directive in the $2.2 trillion relief package that Congress passed and former President Trump signed into law approximately one year ago.
Mr. Powell is to say that the economic situation is much improved compared to the throes of the pandemic but that “the recovery is far from complete.”
He said in prepared testimony that February’s jobless rate of 6.2% “underestimates the shortfall” in the economy and that labor market participation is still “notably below” pre-pandemic levels.
Last month, the Congressional Budget Office had estimated that it would take until 2024 for employment to return to where it was pre-pandemic.
Ms. Yellen is sure to face questions from members about the implementation of the latest round of relief that President Biden signed into law this month, as well as a forthcoming infrastructure and jobs package from the White House that could cost around $3 trillion.
State attorneys general have demanded guidance from Ms. Yellen about language in the $1.9 trillion law that restricts states’ ability to use the $350 billion in state and local funding to offset revenue losses from tax cuts.
IRS Commissioner Charles Rettig said last week it will be a heavy lift for his agency to stand up a system in time to start getting payments from a newly expanded child tax credit out in July.
Treasury says more direct payments of up to $1,400 will be hitting Americans’ bank accounts this week after some 90 million payments have already gone out.
But Democrats on the House Ways and Means Committee said in a letter to Mr. Rettig on Monday that some Social Security and veterans affairs beneficiaries who don’t regularly file tax returns appear to be falling through the cracks and haven’t gotten their payments yet.