Treasury Secretary Janet Yellen has finally admitted how badly she underestimated the inflationary threat last year. Although President Joe Biden himself continues to insist the economy is better than it looks, even he acknowledges that Americans won’t view the economy more favorably until rising prices are tamed.
He’s also offered the crucial concession that the Federal Reserve must be allowed to lead on both inflation analysis and policy. While some may see this as ducking blame, this dose of humility is an enormous improvement over the way Democrats have discussed the economy in the last year and a half.
In early 2021, Biden offered a heroic two-phase plan in which the administration would first rescue the economy and then transform it. Phase I, the rescue, was premised on timing the passage of a $1.7 trillion stimulus bill with a program of mass vaccination. The idea was for a burst of new spending to hit the economy just as businesses were reopening and workers were returning to the job market.
