US Treasury secretary denies recession — Analysis
Janet Yellen attempted to deflect an economic report, which could confirm the American economy’s contraction.
Janet Yellen (US Treasury Secretary) has denied the American economy is in recession. A report published this week could confirm that it is. But, the report, which states the nation is actually going through a “recession”, is not the best definition. “necessary and appropriate” slowdown.
Yellen defended President Joe Biden’s economic policies in an NBC News interview on Sunday, arguing that a negative GDP report won’t mean that the world’s largest economy is in recession. On Thursday, the report will be published. Following a first-quarter contraction of 1.6% annually, it may show that the economy continues to shrink.
Yellen admitted that two consecutive quarters of contraction are often deemed a recession. However, she attempted to reframe the way in which this trend should be understood. “We could see that happen, and that will be closely watched, but I do want to emphasize: What a recession really means is a broad-based contraction in the economy,”Chuck Todd was informed by her. “Even if that number is negative, we are not in a recession now. I would warn that we should be not characterizing that as a recession.”
Yellen, who chaired the US Federal Reserve Bank until then-President Donald Trump declined to appoint her to a second term in 2017, argued that because of strong job growth and other favorable data points, the economy isn’t in a broad-based decline. Todd suggested that signs of recession might include rising unemployment claims and slowing business activity.
“This is not an economy that’s in recession, but we’re in a period of transition in which growth is slowing, and that’s necessary and appropriate,” Yellen said. “We need to be growing at a steady and sustainable pace, so there is a slowdown, and businesses can see that. And that’s appropriate, given that people now have jobs and we have a strong labor market.”
Inflation is acknowledged by the Treasury secretary “way too high” – it’s at the highest rate in more than 40 years, in fact – but she expressed confidence that actions by the Federal Reserve and Biden’s policies will bring prices under control. “I’m not saying that we will definitely avoid a recession, but I think there’s a path that keeps the labor market strong and brings inflation down,”She said.
Yellen stated that the Russia-Ukraine war could cause oil prices to rise even more. She added that she’s working with US allies to cap the prices that Russia is paid for oil, but when the next round of European Union sanctions goes into effect in December, Moscow could take some of its supplies off the market.
Yellen indicated that the US has seen a slowing in economic growth, and would likely see fewer job opportunities over time. “But I don’t think that’s a recession,”She insisted. “A recession is broad-based weakness in the economy. We’re not seeing that now, and I absolutely don’t think that’s necessary.”