(Bloomberg) — Treasury Secretary Janet Yellen said the Biden administration’s investments in semiconductors and clean energy will help address sluggish productivity and labor force growth that have dogged the US economy.
(Bloomberg) — Treasury Secretary Janet Yellen said the Biden administration’s investments in semiconductors and clean energy will help address sluggish productivity and labor force growth that have dogged the US economy.
“With an economy at full employment, I argued that now is the right time for a supply-side expansion that increases our productive capacity and reduces inequality,” Yellen said, according to the text of remarks she’s scheduled to deliver Friday, at the Virginia Innovation Partnership Corp., in Herndon, Virginia.
Legislation pushed by the Biden administration, she said, represents “among the most meaningful investments we’ve ever made in our economic strength.”
The staff of the Federal Reserve recently downgraded its estimate for the US’s potential growth rate, or how fast the economy can run without a tightening resources and higher inflation.
Yellen blamed this on a failure to invest public money in science and technology, noting that federal R&D spending had dropped to a third of 1960s levels and the domestic share of semiconductor manufacturing had declined to 12% from 37% over the past three decades.
“Our government’s failure to invest in innovation has had wide-ranging impacts on our long-term economic wellbeing,” she said.
Increases in that spending won by the Biden administration, she said, would spur additional private-sector investment, lift potential output by raising productivity, lower inequality by providing more jobs and reduce US reliance on China for critical supplies.
The Biden administration championed legislation signed into law in August designed to spur domestic manufacturing of semiconductors, a key component of high-tech goods.
It’s part of an effort to move critical supply chains away from China.
In the same month it secured passage of another law, the so-called Inflation Reduction Act, ramping up investment in clean energy technology.
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