Treasury Secretary Janet Yellen acknowledged Sunday that the United States was experiencing an economic “slowdown” but played down the possibility of a recession, saying the country was in a “transition” after rapid economic growth.
“The economy is slowing,” Yellen said on NBC News’ “Meet the Press,” adding that the correction was “appropriate” for a healthy economy.
“The job market is now very strong,” she said. “This is not an economy in a recession, but we are in a transition period where growth is slowing. This is necessary and appropriate, and we need to grow at a steady and sustainable pace. So there is a slowdown, companies can see that and this is appropriate, given that people have jobs now, we have a job market strong “.
“But you don’t see any of the signs now – a recession is a widespread contraction that affects many sectors of the economy. We don’t have that,” she added. “I would say we’re seeing a slowdown.”
Yellen went on to say that the “common definition” of a recession is two consecutive quarters of negative GDP, and while economists expect to see negative growth again this quarter after seeing -1.4% last quarter, that doesn’t mean the US still is. stagnant.
Since President Biden called inflation ‘transient’, the US has experienced 13 straight months of rising costs
“Even if that number is negative, we’re not in a recession right now, and we shouldn’t call that a recession,” she said.
NBC anchor Chuck Todd pushed back, saying the secretary was “splitting hair” over the introduction.
“I mean, if the technical definition is two quarters of a contraction, you’re saying that’s not a recession,” Todd said.
“That’s not the technical definition,” Yellen argued. “There is an organization called the National Bureau of Economic Research looking at a wide range of data in deciding whether or not there is a recession, and most of the data they are looking at now is still strong. I would be surprised if the National Bureau of Economic Research would declare this period as a recession, even if it did happen. It has two quarters of negative growth. We have a very strong job market. When you create close to 400,000 jobs a month, it’s not a recession.”
Yellen’s remarks come as a former Obama economic adviser Larry Summers told CNN On Sunday, “there is a very high probability of a recession” and that the US is “unlikely” to see a “soft landing”. Last month, Summers warned that a recession is “almost inevitable, probably a 75%, 80% chance within the next two years, and there is certainly a real risk of it happening sooner.”
The US has seen 13 consecutive months of high inflation since the Biden administration, including Yellen, dismissed concerns about rising costs and said the contributing factors were “temporary”.
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Yellen admitted in May of this year that she was “wrong at the time about the path inflation would take”.
Inflation rose to 9.1% in June, marking the fastest rate of inflation since December 1981.
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