Treasury Sec. Janet Yellen says the U.S. economy is growing within the ideal range

Transcript

SCOTT SIMON, HOST:

This hour, we begin with the U.S. economy because the latest numbers showed the gross domestic product is growing faster than expected. We're joined now by Treasury Secretary Janet Yellen. She joins us from Rio de Janeiro, where she's been at the G20 meeting. Secretary Yellen, thanks so much for being with us.

JANET YELLEN: Thanks for the - inviting me.

SIMON: The economy expanded 2.8% between April through June, compared to the same period last year. I will point out it's an election year. Is this good news for U.S. consumers?

YELLEN: Oh, it's absolutely good news. I mean, this is strong growth. It shows that the U.S. outlook remains solid. We saw consumer spending continue at a solid pace. We're seeing very strong private investment spending. And all of that is good news in the context where inflation is coming down. And the inflation news has all been very positive, and we have a job market that is about the strongest that we've seen in 50 years.

SIMON: When you say the inflation news has all been very positive, the Federal Reserve, of course, which I understand is independent of your department, did hike interest rates to - in part, to slow down inflation. That has a cost for consumers, too, doesn't it?

YELLEN: Well, the economy continues to grow. The job market has softened a little bit but remains, in an absolute sense, very strong. And inflation has come meaningfully down and looks like it's on a path to continue toward the Fed's 2% target. We received some news about the inflation index, and the news there was good and suggested continued inflation in line with the Fed's objectives.

SIMON: You're referring to the Personal Consumption Expenditure Index?

YELLEN: That's right.

SIMON: Two-point-five percent for June compared to a year ago. But still, pennies, dimes, quarters and dollars, extra spent every week, every month - that adds up for people, doesn't it?

YELLEN: Sure. Increases in prices have declined and are now modest for things like food. But of course, the level of prices is significantly higher than where it was pre-pandemic. And this is certainly something that's noticeable and disturbing to American households. And it's, in a way, on top of long-standing trends that have made housing increasingly unaffordable for so many Americans, especially young people looking to start a family, to buy a first home, health care that is a huge burden, child care. So for President Biden, for the Biden-Harris administration, bringing down the cost of living, this is a top priority - and recognize that Americans are suffering from high costs in all of these areas I mentioned.

SIMON: Well, what can be done about high costs when, obviously, people are making a lot of money off it, and money that is helping other figures?

YELLEN: Well, for example, housing - I think there's a lot that can be done to bring down the cost of housing. And that would be by undertaking initiatives to raise the supply of housing. And President Biden has suggested a number of policies that could do that.

He, in his budget, included plans to add 2 million units of affordable housing and to help first-time homebuyers be able to afford to buy homes. We're using every tool at the disposal of the administration to make a difference to promote housing.

SIMON: You're in Rio for the G20 meeting of leaders from the world's 20 biggest economies, of course. I gather Brazil has proposed a tax on billionaires - not on annual income they might receive, but on their accumulated wealth, the assets they carry over year to year. What do you think of that idea?

YELLEN: Well, that's something they've talked about. You know, I and President Biden strongly support the notion that there should be a fair tax system and progressive taxation. And this is the basic underlying idea that the Brazilians have that we should make sure that the very wealthy, high-income, high-wealth individuals pay their fair share.

And we've proposed many policies that would ask rich people, high-income Americans, to really step up and pay their fair share, including a tax that would be imposed on very high-income people - billionaires or those with more than $100 million - to make sure that they pay on their income, including unrealized capital gains.

So the basic concept of a fair tax system that's progressive is something that we strongly support. We're not in favor of an international negotiation to achieve that, but what I'm hearing here at the G20 meetings is that most countries agree that it is appropriate to make the wealthy pay their fair share.

SIMON: U.S. Treasury Secretary Janet Yellen, speaking with us from Rio. Secretary Yellen, thanks so much for being with us.

YELLEN: Thank you, Scott. Transcript provided by NPR, Copyright NPR.