Janet Yellen, the Treasury secretary, acknowledged in an interview this week that President Joe Biden’s large deficit spending has exacerbated inflation in the United States.
These comments were made in an interview with Matt Murray, the editor-in-chief of the Wall Street Journal.
“As you know, one of the criticisms that has been leveled against the administration and the Fed, in particular, is not anticipating the impact of inflation a year ago. It really goes back to the previous administration as well; it was (stimulus bills) related to COVID and [the] bill that [Biden] signed over the last year that helped fuel this.” Murray added.
“You’re an economist, so you must be familiar with the reasons behind these occurrences. What’s your take on how government spending may have contributed to the issue we’re facing now?” Murray inquired.
“So, look,” she admitted. “Inflation is a result of demand and supply, and the spending that took place as part of the American Recovery Plan helped to stimulate demand.”
“Yes, I believe it was necessary and appropriate at the time,” she went on. “Our economy faced significant challenges when President Biden took office, with forecasters predicting extremely high unemployment for a long period of time.” “We had low-wage employees who had just been laid off in large numbers. We observed cars parked for miles in food banks, Americans concerned about not being able to feed their families, and so on. Forecasts were particularly pessimistic.”
At the same time, she also said that there was an “unintended consequence” of the administration’s efforts to avoid a recession and focus on full employment, which she boasted was a success.
She also stated that despite the economic impact of the Russian invasion of Ukraine, the economy was still firm.
Despite the administration’s attempts to place the blame for high prices on other factors, polls reveal that Biden and his policies are more likely to be blamed than any other factor.