During a Thursday speech at Ford’s electric vehicle factory in Dearborn, Michigan, the official pinned the blame for crises like inflationary pressures, supply chain bottlenecks, and high energy costs on factors outside of the administration. Yet she praised the $1.9 trillion American Rescue Plan, the $740 billion Inflation Reduction Act, and other landmark packages signed by the commander-in-chief as causes for purportedly strong economic conditions.
“Our plan has worked,” she commented. “The United States experienced the fastest pace of job creation in our history. Household balance sheets are strong. Businesses continue to invest. Our broad and inclusive recovery has outpaced that of many other large economies. And measured by gross domestic income, our economy continues to expand and is operating above levels that would have been predicted pre-pandemic.”
As measured by the far more often cited gross domestic product, however, the United States met the rule-of-thumb definition of a recession — two consecutive quarters of negative growth — last month as the economy shrank at a 1.5% annualized rate in the first quarter and contracted at a 0.6% pace in the second quarter. Yellen’s remarks appear to be a pivot from her earlier claim that the nation is not in a “recession,” but rather a “period of transition in which growth is slowing.”
“It’s fair to say: by any traditional metric, we have experienced one of the quickest economic recoveries in our modern history,” Yellen nevertheless said on Thursday.
Meanwhile, the personal saving rate — the share of disposable income Americans devote to savings — was 5% in August, according to data from the Bureau of Economic Analysis. Although households saved between 10% and 35% of their income in the months that followed the lockdown-induced recession, the personal savings rate is currently well below the 7% or more Americans typically saved through much of the last decade.
With respect to inflation, which may be causing Americans to reduce spending, Yellen deflected blame from the White House — although reports indicate that the American Rescue Plan worsened labor shortages and contributed to other phenomena behind rising price levels.
“Now, Americans are rightfully concerned that higher prices are squeezing their day-to-day budgets and their longer-term savings,” Yellen continued. “The causes of inflation are largely global. But the pain of inflation is personal. This administration’s top economic priority is to combat inflation, even as we know the Federal Reserve has the primary role to play in restoring price stability.”
Biden has formerly pinned inflation on corporate price gouging and “Putin’s Price Hike.” As year-over-year inflation reached its highest levels in June, the commander-in-chief falsely claimed that rising price levels are “worse everywhere but here” — though developed nations such as Germany, the United Kingdom, Canada, South Korea, and Japan had been experiencing lower inflation than the United States.
Yellen, who recently argued that an expanded Internal Revenue Service will not impact middle class Americans’ audit rate, also expressed her willingness to pursue more tax increases.
“This includes closing loopholes and returning tax rates for high earners and corporations to historical norms,” she said. “By making everyone pay their fair share, these reforms will provide our government with additional fiscal room to make critical investments.”