US Treasury Secretary Janet Yellen said on Sunday that US economic growth was slowing and acknowledged the risk of a recession, but said a downturn was not inevitable.Ms. Yellen said to the Press that the strong hiring numbers and consumer spending show that the U.S. economy is not currently in recession.US hiring remained strong in June, with 372,000 jobs added and the unemployment rate holding steady at 3.6%. It was the fourth straight month of more than 350,000 jobs.
“This is not an economy that is in recession,” Ms. Yellen said. “But we are in a period of transition where growth is slowing, and that is necessary and appropriate.”Still, last week’s data suggested the labor market was softening, with new jobless claims hitting an eight-month high.Ms. Yellen said inflation “is too high” and the Federal Reserve’s recent interest rate hike is helping to bring soaring prices back under control.
In addition, the Biden administration is selling oil from the Strategic Petroleum Reserve, which Ms. Yellen said has already helped lower gas prices.“Just in the last few weeks, we’ve seen gas prices drop about 50 cents (a gallon) and there should be more to come,” she said. Ms Yellen, who previously served as chair of the Federal Reserve, hopes the Fed can cool the economy enough to lower prices without triggering a broad economic downturn.”I’m not saying we’re definitely going to avoid a recession,” Yellen said. “But I think there is a path that will keep the labor market strong and reduce inflation.”
U.S. gross domestic product, a broad gauge of economic health, fell by an annualized 1.6% in the first quarter, and Thursday’s report expected economists to show an increase of just 0.4% in the second quarter. Ms. Yellen said that even if the second-quarter figure was negative, given the strength of the labor market and strong demand, it would not mean a recession had occurred.
“A recession is a broad-based weakness in the economy. We don’t see that now,” she said.Journalists, some economists and analysts have traditionally defined a recession as two consecutive quarters of decline in GDP. But the private research group, which is the official arbiter of US recessions, looks instead at a wide range of indicators, including jobs and spending. Brian Deese, director of the White House’s National Economic Council, said on Twitter Sunday that the upcoming second-quarter data would be “looking back,” which he called important context. “The hiring, spending and production numbers look solid,” he said.
