How does Yellen counter claims that the American Rescue Plan caused inflation?

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Yellen Attributes Inflation to Global Factors, Not Solely the American Rescue Plan

Treasury Secretary Janet Yellen asserted that inflation in the United States is a global phenomenon driven by a confluence of factors, rather than being primarily caused by the American Rescue Plan (ARP). She indicated that inflation is likely to remain elevated but expressed hope for moderation soon. Yellen's position is that the extensive supply-demand imbalances, exacerbated by pandemic-related shifts in consumer behavior and significant disruptions to global supply chains, are the principal culprits.
Global Inflationary Pressures and Diverse Fiscal Policies

Yellen highlighted that nearly all developed countries are experiencing high inflation, despite implementing vastly different fiscal policies. This global consistency, she argued, demonstrates that the American Rescue Plan cannot be the singular or even dominant cause of the current price increases. The US$1.9 trillion ARP, enacted in the previous year, has been a focal point of Republican criticism regarding the 40-year high inflation rates.
Supply Chain Disruptions and Demand Shifts

The Treasury Secretary reiterated her view that inflation is fueled by mismatches between supply and demand. During the pandemic, there was a notable surge in demand for goods as consumers shifted away from services. Simultaneously, severe disruptions to global supply chains, from manufacturing hubs to shipping, further constrained the availability of these goods, leading to price hikes.
Impact of Russia's Invasion of Ukraine

Furthermore, Yellen pointed to the significant impact of Russia's invasion of Ukraine as a key contributor to rising inflation. The conflict has led to substantial increases in energy and food prices worldwide. These external shocks, which were not foreseen when initial inflation assessments were made, have compounded the inflationary pressures already present in the global economy.
Re-evaluation of "Transitory" Inflation

Yellen acknowledged that both she and Federal Reserve Chair Jerome Powell may have misjudged the duration of inflation by using the term "transitory." She explained that this assessment did not account for the emergence of multiple COVID-19 variants that continued to disrupt economic activity and global supply chains. Additionally, the unforeseen consequences of the war in Ukraine on food and energy markets were not factored into the earlier predictions of inflation quickly subsiding.

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How does Yellen counter claims that the American Rescue Plan caused inflation?

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