Yellen’s yardstick: US Treasury chief sees unemployment as key

Janet Yellen says the US’s effective unemployment rate is nearly 10%, far higher than the headline rate of 6.3%.

United States Treasury Secretary Janet Yellen says she will judge the success of President Joe Biden’s coronavirus stimulus plan by how quickly it returns the US economy to pre-pandemic levels of unemployment. Speaking to a New York Times newspaper online event, Yellen also played down the increased debt levels that would be incurred from Biden’s $1.9 trillion American Recovery Plan being debated in Congress. She said that due to low-interest rates, US interest expenses as a share of gross domestic product (GDP) are at 2007 levels. The current US unemployment rate is 6.3 percent, compared with 3.5 percent before the pandemic – a level widely viewed as effectively full employment. But Yellen said that because four million people have dropped out of the labour force because of child care responsibilities during the COVID-19 pandemic, the effective unemployment rate is close to 10 percent.