U.S. Treasury Secretary Janet Yellen said on Sunday that U.S. economic
growth is slowing and she acknowledged the risk of a recession, but
she said a downturn was not inevitable.
Yellen, speaking on NBC’s “Meet the Press,” said strong hiring numbers
and consumer spending showed the U.S. economy is not currently in
U.S. hiring remained robust in June, with 372,000 jobs created and the
unemployment rate holding at 3.6%. It was the fourth straight month of
job gains in excess of 350,000.
“This is not an economy that is in recession,” said Yellen. “But we’re
in a period of transition in which growth is slowing and that’s
necessary and appropriate.”
Still, data last week suggested the labor market was softening with
new claims for unemployment benefits hitting their highest point in
Yellen said inflation “is way too high” and recent Federal Reserve
interest rate hikes were helping to bring soaring prices back in
In addition, the Biden administration is selling oil from the
Strategic Petroleum Reserve, which Yellen said has already helped
lower gas prices.
“We’ve seen gas prices just in recent weeks come down by about 50
cents (a gallon) and there should be more in the pipeline,” she said.
Yellen, who previously served as chair of the Federal Reserve, hopes
the Fed can cool the economy enough to bring down prices without
triggering a broad economic downturn.
“I’m not saying that we will definitely avoid a recession,” Yellen
said. “But I think there is a path that keeps the labor market strong
and brings inflation down.”
U.S. gross domestic product, a broad measure of economic health,
shrank at a 1.6% annual rate in the first quarter, and a report on
Thursday is expected to show a gain of just 0.4% in the second
quarter, according to economists polled by Reuters.
Yellen said that even if the second-quarter figure is negative, it
would not signal that a recession has taken hold, given the strength
in the job market and strong demand.
“Recession is broad-based weakness in the economy. We’re not seeing
that now,” she said.
Journalists, some economists, and analysts have traditionally defined
a recession as two consecutive quarters of GDP contraction. But the
private research group that is the official arbiter of U.S. recessions
looks at a broad range of indicators instead, including jobs and
Brian Deese, director of the White House National Economic Council,
said on Twitter on Sunday that the upcoming second-quarter figures
would be “backward-looking,” which he called important context.
“Hiring, spending, and production data look solid,” he said.