Politics

Treasury Secretary Yellen says Biden stimulus only a ‘small contributor’ to inflation

U.S Treasury Secretary Janet Yellen told the House Financial Services Committee that President Joe Biden’s $1.9 trillion stimulus package contributed to boosting demand but only played a small role in the spike in inflation.

Wednesday Yellen appeared before the committee and said, “It’s certainly true that the American Rescue Plan put money in people’s pocket… and contributed to strong demand in the U.S. economy, but if you look at the amount of inflation that we have, and its causes, that is at most a small contributor.” 

Reuters reports that Yellen insisted there was a “very good reason” to continue with the stimulus package to deal with the potential of high unemployment and joblessness as a result of demand shortage. She pointed to the Covid-19 pandemic as the main driver of inflation. The pandemic has pushed demand away from the service industry towards goods, which has negatively affected the supply chain.

According to The Hill, Federal Reserve Chairman Jerome Powell, who also appeared before the House Financial Services Committee, stated, “We understood demand would be strong. We didn’t understand [the] significant problems of the supply side.”

Republican lawmakers have attempted to connect the President to the rising prices across the country, and pushed back on Yellen and Powell’s claims that the stimulus package did not play more of a role in higher inflation. Yellen has defended the Biden administration’s stimulus package, stating it was difficult to predict how much stimulus the country would need to overcome the economic setbacks that would result from the pandemic.

Yellen said, “we were very concerned that the most significant risk facing the American economy was a shortage of jobs and a prolonged downturn. It would scar many people, particularly the most vulnerable.”

With the emergence of the new omicron variant of Covid-19, the threat remains for supply chain back ups and potential for stricter restrictions in many countries. Many lawmakers are asking the Federal Reserve to hold off on declaring an economic comeback victory, as the world is faced with another Covid-19 variant.

ARTICLE: JILLIAN WEIDNER

MANAGING EDITOR: CARSON CHOATE

PHOTO CREDITS: REUTERS

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I was born and raised in Omaha, NE before moving to Sioux Falls, SD to attend college at Augustana University. This past May I graduated from Augustana with a Bachelor of Arts in Spanish and Biology with an emphasis in Allied Health. I first discovered FBA through my involvement with Turning Point USA where I worked as a Campus Coordinator in college. I have a passion for politics and activism, and was drawn to FBA’s dedication to spreading the truth. Unbiased news is rare in today’s society, so I wanted to be a part of FBA’s mission to change that.

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