With Unemployment at Record Highs, Yellen Urges Congress to Pass Stimulus

Janet Yellen

Senate Democrats voted by a narrow margin last week to pass President Joe Biden’s $1.9 trillion stimulus package. Vice President Kamala Harris cast the tie-breaking vote. Now, the Democrats aim to push the plan through within the next two weeks even without Republican support, using a process called reconciliation. 

See: $1.9 Trillion Stimulus Package Passes Senate with Kamala Harris’ Tie-Breaking Vote
Find: Pushback Over Biden’s $1.9 Trillion Proposal Could Delay Stimulus Funds

Treasury Secretary Janet Yellen cited record-high unemployment figures across the U.S. and noted that the stimulus could return the U.S. to “full employment next year,” if it passes, the Chicago Tribune reported. Based on Congressional Budget Office analysis, the Treasury secretary believes that without the added stimulus bill, it could take until 2025 to return unemployment rates to 4%. 

Unemployment is near levels not seen since the Great Recession, according to a report issued last week by the Bureau of Labor Statistics. January’s unemployment rate fell slightly, by 0.4 percentage points, to 6.3%. But nearly 40% of jobless people right now classify as “long-term unemployed,” meaning they have been out of work at least 27 weeks. This number rivals the 46% record during the Great Recession. There are 9.9 million more Americans out of work right now than in February 2020, just prior to the start of the pandemic. 

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See: Jobless Claims at 779,000 – Lowest Since Nov. 28
Find: US Adds 49,000 Jobs in January, But There’s Still Risk of a ‘Double-Dip Recession’

The $1.9 trillion stimulus could speed recovery during a critical time period, CNBC reported. According to the news outlet, economists say that once individuals have been unemployed for more than six months, household income may drop significantly as savings get used up. It is also harder to find a new job with such a large resume gap, which can lead to reduced income down the line and a path to poverty. 

However, Republicans opposed to the stimulus, along with Democrat Larry Summers, a former economic advisor under former President Obama, cite runaway inflation as one reason to think twice about such a large economic recovery bill. Yellen said the U.S. has “the tools to deal with” inflation, and “there’s absolutely no reason why we should suffer through a long, slow recovery,” the Chicago Tribune reported.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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