Treasury secretary Janet Yellen said Sunday that she expects "much lower inflation" within the next year. But the Cabinet appointee has been consistently—and baselessly—optimistic about inflation since she joined the Biden administration.
"I believe by the end of next year you will see much lower inflation, if there's not an unanticipated shock," Yellen said in a Sunday appearance on 60 Minutes. The secretary cited reductions in shipping costs and delivery lags as evidence that high prices will soon be in the rearview.
Yellen made virtually the same prediction last year, when inflation was at a troubling 5.4 percent. "I don’t think we’re about to lose control of inflation," Yellen said in October 2021, suggesting the resolution of supply chain issues would tame inflation within a year. By June 2022, however, inflation had surged to a 40-year high of 9.1 percent.
In May 2021, less than two months after Congress passed the $1.9 trillion American Rescue Plan, Yellen predicted there wasn't "going to be an inflationary problem" at all because President Joe Biden's spending plans were "relatively small relative to the size of the economy," an argument that put her in lockstep with White House officials. Economists, however, have concluded that the American Rescue Plan significantly contributed to inflation.
Yellen offered a mea culpa for her inaccurate predictions in June, admitting she "was wrong ... about the path that inflation would take."
Biden was similarly unsuccessful in accurately predicting inflation rates. The president in July 2021 declared that "no serious economist" is "suggesting there's unchecked inflation on the way."