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U.S. Treasury Secretary Janet Yellen emphasized Thursday that U.S. public investments that draw private-sector capital are essential for fostering long-term sustainable and inclusive growth.
Traditional supply-side economics “ignores the importance of public infrastructure, education and workforce training and government-supported basic research,” she said in a prepared speech at the Economic Club of New York.
Such a model, Yellen added, “wrongly assumes that policies such as tax cuts for those at the top and deregulation will fuel growth and prosperity for the nation at large.”
The U.S.’s economic strategy should be driven by public interventions, in addition to the public or private sector. She cited the Biden administration’s major efforts to invest in the domestic economy with key infrastructure legislation in 2021, as well as semiconductor investments and clean energy tax credits approved in 2022.
Those initiatives have resulted in some $850M worth of manufacturing and clean energy investments by private companies in the U.S. since Biden took office in 2021, she said.
“Modern supply-side economics embraces government collaboration with the private sector, targeting public interventions to create a supportive environment for business and fuel private sector investments,” Yellen noted.
Earlier on Thursday, Yellen said laid out her assessment on the U.S. labor market, noting it “has become a little less hot, a little more normal” as the jobless rate has ticked up.