Yellen: US Labor Market Has Become ‘More Normal’

America’s job market is starting to resemble its pre-pandemic self, says Treasury Secretary Janet Yellen.

Speaking to CNBC Thursday (June 13), Yellen also noted that cooling wage growth does not threaten to compound inflation.

“The labor market has become a little less hot, a little bit more normal. The number of job openings has declined some. We’ve had a burst in labor force participation,” Yellen said.

“And so the labor market is resembling what it looked like pre-pandemic. Wages are increasing but at a slower rate. And so that doesn’t really look like it’s a threat to inflation,” Yellen added in an interview with the network’s SquawkBox.

She also said that a big piece of remaining inflation that needs to come down is in the housing sector, where recent rent spikes are slower to come down as leases roll over. Other factors driving American consumers; view of the economy include higher costs for necessities such as housing, education and healthcare.

Earlier this month, initial unemployment claims increased, a signal that the American job market was returning to pre-pandemic levels.

And last week saw data from the Bureau of Labor Statistics which showed that while headline inflation had cooled in May, Americans were still paying more for their rent and to dine out.

“There may be a shift in the works here among the paycheck-to-paycheck segment of the economy, which represents 60% of consumers,” PYMNTS wrote. “Last month, Walmart Chief Financial Officer John David Rainey said rising restaurant prices spurred consumers to pivot and buy ingredients at the retailer to make their meals at home.”

Data from the PYMNTS Intelligence report “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck” shows that two-thirds of consumers who have trouble meeting their monthly expenses have been dialing back on  “nice to have” purchases so that they can spend on essentials like food.

As late as last year, PYMNTS Intelligence concluded that covering the cost of shelter, food and clothing took up about a fifth of consumers’ disposable income.

“The percentage is likely higher now, given that wages have not kept pace with inflation in the paycheck-to-paycheck economy, which means that more dollars must be allocated to obtain the same level of goods and services,” PYMNTS wrote.