Treasury Secretary Janet Yellen mentioned Thursday the U.S. economic system is in a state of transition, not recession, regardless of two consecutive quarters of detrimental progress.
Recession, Yellen insisted, is a “broad-based weakening of our economy” that features substantial layoffs, enterprise closures, strains in family funds and a slowdown in personal sector exercise.
“That is not what we are seeing right now,” she mentioned throughout a day information convention on the Treasury. “When you look at the economy, job creation is continuing, household finances remain strong, consumers are spending and businesses are growing.”
Those feedback, although, got here on the identical day that the Commerce Department’s Bureau of Economic Analysis reported that gross home product, the broadest measure of financial exercise, fell 0.9% within the second quarter.
Coming on the heels of a 1.6% contraction within the first quarter, the 2 straight declines meet a generally used definition of recession. The National Bureau of Economic Research, nonetheless, is the official arbiter of recessions, and certain will not rule for months.
Yellen began her remarks with a listing of the administration’s financial accomplishments, together with nonfarm payroll progress of greater than 9 million.
But inflation has confirmed the larger impediment, rising to 9.1% in June whereas financial progress has didn’t sustain. Consumer and enterprise confidence ranges have plunged, with latest surveys displaying a strong majority of Americans imagine the nation is in recession.
Yellen acknowledged the burden that larger costs carry and mentioned the administration is “laser-focused” on addressing the state of affairs.
“We’ve entered a new phase in our recovery focused on achieving steady, stable growth without sacrificing the gains of the last 18 months,” she mentioned. “We know there are challenges ahead of us. Growth is slowing globally. Inflation remains unacceptably high, and it’s this administration’s top priority to bring it down.”
President Joe Biden and Yellen each touted the chances of a brand new invoice that Democratic lawmakers apparently have agreed on to combat inflation. The laws is aimed toward elevating tax income, reducing drug prices and investing in renewable vitality.
Yellen famous that whereas the Federal Reserve, which she chaired from 2014-18, has “the primary role in bringing down inflation, the president and I are committed to taking action do drive down costs and protect Americans from the global pressures we face.”
The Fed has raised charges 4 instances this yr, for a complete of two.25 share factors, and certain will add extra will increase later within the yr.
Yellen attributed rising inflation to the struggle in Ukraine, provide chain issues and the Covid pandemic. She didn’t focus on the impression that financial and financial stimulus had on worth pressures.
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