Yellen says U.S. economic performance ‘vindicates’ heavy COVID-era spending

WASHINGTON (Reuters) – The U.S. Treasury Secretary Janet Yellen said on Wednesday that the U.S. economy’s strong performance is evidence that President Joe Biden’s $1.9 trillion American Rescue Plan Act was the right approach in 2021 to avoid a slow and painful recovery from the COVID-19 pandemic.

Yellen said in remarks to the U.S. Conference of Mayors in Washington that what was the most dangerous back then “was in going too small” with recovery spending.

“Many had argued that this Rescue Plan wasn’t needed. But I believe seeing where we are today vindicates the approach we took,” Yellen said in excerpts of her remarks. “GDP growth is strong and inflation has declined significantly. There are four million more jobs than before the pandemic.”

Unemployment has remained below 4% for the longest period in 50 years and wage gains have been broadly shared, including by younger and less-educated workers, she added.

By contrast, the recovery after the 2008-2009 financial crisis was slow and painful, with higher unemployment.

“Workers and families faced unemployment and economic hardship for too long, and it created scarring for a generation of American workers,” Yellen said.

(Reporting by David Lawder; Editing by Chizu Nomiyama)