U.S. Treasury Secretary Janet Yellen on Monday said she does not think the U.S. economy is overheating and that while inflation is higher than in recent years, it is related to disruption from the COVID-19 pandemic.

Data last week showed that U.S. consumer spending increased solidly in September, which together with falling COVID-19 infections and recovering consumer confidence bode well for a pickup in economic activity in the final quarter. 

While inflation pressures are broadening out, Yellen reiterated that she believed price rises are transitory.

"I would not say the US economy is currently overheating, we're still 5 million jobs below where we were pre-pandemic and labor force participation has declined and the reasons relate to the pandemic," Yellen told a news conference in Dublin.

Yellen predicted that labor supply constraints and supply bottlenecks will ease as the pandemic comes under control, noting that a surge in demand for durable goods in the U.S. had come at a time where it was hard to source some of those goods.

"I believe as we get beyond the pandemic, that these pressures release and in that sense, I believe inflation is transitory, and we don't have an economy that is in a longer-run sense overheating."