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Treasury Secretary expects price hikes to return to “normal levels” once pandemic has subsided

Treasury Secretary Janet Yellen expects price hikes in grocery stores, restaurants and elsewhere to ease once supply chain issues are resolved.

“I think it’s transient. But I’m not saying these pressures will go away in a month or two,” Yellen told “CBS Evening News” presenter and editor Norah O’Donnell on Tuesday.

The pandemic “has led to a huge shift in demand from services to goods. And this has created huge bottlenecks in supply chains,” she said. “As the economy adjusts and we bring the pandemic under control, the global economy is coming back, these pressures will ease and, I think, return to normal levels.”

A standard backlog of cargo ships waiting to enter southern California ports has helped drive up the costs of goods and services during the pandemic. There is also a shortage of trucks and drivers to transport goods from ports.

With limited stocks and labor shortages, retailers are urging consumers to start their holiday shopping early. Yellen urged consumers to stay calm.

“There could be isolated shortages of goods and services in the coming months,” Yellen said. “But there is a plentiful supply of goods. I think there is no reason for consumers to panic about the lack of goods they will want to buy this Christmas.”

However, there could be catastrophic effects for Americans if Congress does not raise or suspend the debt limit, Yellen warned. Congress postponed the debt ceiling debate to December after passing a short-term extension.

“It is absolutely necessary that Congress take action to raise or suspend the debt ceiling,” Yellen said, adding that it “absolutely” could lead to a recession.

“Fifty million seniors would risk not seeing their Social Security checks arrive on time. Our troops should ask themselves when or if they were going to be paid,” she said. “We would see an increase in interest rates on all forms of borrowing, on mortgages, on credit cards. Households would see their interest bills increase.”