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Yellen, speaking to reporters at a technology business incubator
near Dulles International Airport, said she sees no signs of
higher inflation expectations over the medium term being built
into wages and prices.
"I don't believe it's becoming embedded in the U.S. economy,"
she said of inflation when asked about recent Consumer Price
Index data showing persistent increases in non-food, non-energy
core inflation factors, including rents.
Yellen said the report showed more work was needed to bring
inflation down, but there also were some early signs of producer
costs easing, in metrics such as supplier deliveries and
shipping costs, which "would feed into lower inflation over
time."
In another campaign-style economic speech at the Virginia
Innovation Partnership Corp, Yellen said investments such as
President Joe Biden's $430 billion energy and health legislation
would reduce some costs for Americans and bring down inflation
over time by increasing the U.S. economy's productive capacity.
Touting the $52 billion CHIPS and Science Act, Yellen said this
will help to reverse a research investment deficit that has put
the United States at risk of losing its technology lead to China
and other competitors.
"Our government's failure to invest in innovation has had
wide-ranging impacts on our long-term economic well-being. At
the most fundamental level, it impacted our productive capacity.
That's the ceiling for what our economy can produce," Yellen
said.
By one measure, the chips shortage of 2021 shaved about a full
percentage point off of economic growth, as production of cars
and other goods was constrained, Yellen said, adding that there
is little U.S. capacity for the most advanced semiconductors.
Building a semiconductor ecosystem at home will help mitigate
the risks of a severe chip shortage," she said.
Mobilizing capital toward semiconductors and clean energy,
through a recently enacted climate and drugs package and
boosting research and development will raise the U.S. economy's
aggregate production capacity.
"And in turn, we are raising America's long-term economic
outlook," Yellen said.
(Reporting by David Lawder; additional reporting by Doina Chiacu
and Heather Timmons; Editing by Paul Simao and Andrea Ricci)
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