Janet Yellen: Treasury secretary says she’s not seeing signs of a recession in the US economy



CNN

Treasury Secretary Janet Yellen said Thursday in an interview with CNN that she saw no signs of a recession in the near term as the U.S. economy rebounded from a six-month contraction. .

In an interview with an Ohio resident that aired on CNN’s “Erin Burnett OutFront,” Yellen said third-quarter GDP data released Thursday highlighted the strength of the U.S. economy as policymakers politics is acting urgently to calm the rising inflation. It had a powerful impact on how Americans view the economy – and threatened the Democratic majority on Capitol Hill less than two weeks after the midterm elections.

“Look, what we’re seeing right now is strong growth this quarter. “Obviously, growth slowed after a quick recovery from high unemployment,” Yellen said when asked about the latest GDP data, which eased fears of a recession. We’re in an economy full of jobs. It’s only natural that growth will slow down. And it’s over the first three months of this year, but it’s still going strong. We have a very strong labor market. We’re not. I see signs of a recession in this economy right now.”

Yellen’s optimism comes amid growing concern from economists and financial officials that a recession is likely next year, but is based in part on elements of ‘the latest data that shows signs of a necessary reduction in important sectors of the economy. path to a “soft landing” as the Federal Reserve prepares to continue raising interest rates.

Gross domestic product – the broadest measure of economic activity – rose at a 2.6% annual rate during the third quarter, according to preliminary estimates released by the Bureau of Economic Analysis. This is a reversal from a 1.6% decline in the first quarter of the year and a negative 0.6% in the second.

But Yellen’s views also underscored the difficult balancing act President Joe Biden and other top economic officials have faced over the year, as they seek to highlight a rapid economic recovery and a win for lawmakers. They are big laws and they promise to deal with inflation.

“Inflation is very high — it’s unacceptable and Americans feel it every day,” Yellen said when asked how the administration framed its view of the U.S. economy with its unease. voters. Yellen acknowledged that prices will take time to recover, and said efforts to return them to levels “that people are more used to” could take “the next couple of years.”

It’s a reality that has undermined the government’s efforts to capitalize on what officials consider a strong record. Biden, asked about the economy last week, told reporters it was “strong as hell,” prompting criticism from Republicans.

But Yellen agreed with the president’s assessment that the economy remains strong, standing out compared to other economies around the world.

“If you look around the world, there are a lot of economies that are really suffering not only from inflation but very weak economies, and the United States stands out. We have unemployment at a 50 year low. … We saw in the report this morning – consumer spending and investment spending continued to increase. We have strong domestic finance, commercial finance, well-capitalized banks,” he said.

He added: “This is not an economy in recession and we are continuing to do a good job.”

Yellen also acknowledged frustration within the administration that efforts to pull the US economy out of the crisis have not gotten what credit officials think they deserve.

“There were a number of problems that we could have had, and difficulties that many American families would have had,” Yellen said. “These are problems that we don’t have, because of what the Biden administration did. Therefore, a person often does not get credit for a problem that does not exist. ”

Yellen traveled to Cleveland as part of the administration’s push to highlight key legislative wins — and the billions of dollars in private sector investment that have fueled the policies. those for production throughout the country.

It is an important part of the economic strategy designed to address many of the weaknesses and failures revealed when Covid-19 devastated the world, with significant federal investment in infrastructure. and build – or create from scratch – key parts of critical supply chains.

Citing a series of major private sector investments, including a $20 billion Intel company opening a few hours’ drive outside Columbus, Yellen said there are “real, tangible investments happening right now,” or he even admitted that it will take time to finish completely.

Yellen promised that these efforts will be felt as the economy moves in the coming months and years. Asked if the government’s general message to Americans is patience, Yellen said: “Yes.”

“But you’re starting to see bridges being built to come online – not in every community, but soon. Many communities will go to see the improvement of roads, the repair of broken bridges. We see the flow of money into research and development, which is an important source of long-term strength for the US economy. And America’s power will grow and we will become a more competitive economy,” he said.

Yellen also talked about this week’s fight over raising the debt ceiling, an ongoing crisis in Washington, which House Republicans have promised to use for investment if so they take the majority.

“The president and I agree that America should not be held hostage by members of Congress who think it is wrong to compromise the United States’ credit rating and threaten to default on the U.S. Treasuries, which are the backbone of global financial markets,” Yellen said. .

But Yellen, who has long highlighted the “destructive” nature of the conflict, has also pushed back on lifting the debt limit through legislation. A group of House Democrats wrote to Democratic leaders to request that action in a weak-duck session of Congress, but Biden rejected the idea this week.

When asked about the split, Yellen said only that she and Biden agreed that “it’s really up to Congress to raise the debt ceiling.”

“It absolutely needs to be done, and I want to see it happen the way it can,” Yellen added.

As the administration moves into a period when it is common for senior officials to step down, he made it clear that he did not intend to be one of them. When asked about the report she informed the White House about where she wants to stay next year, Yellen said it was an “accurate read.”

“I’m very pleased with the program we discussed,” Yellen said. “And I see in that a great emphasis on economic growth and addressing climate change and strengthening American households. And I want to be a part of that.”

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