US Treasury weighs in on recession prospects

Janet Yellen, Secretary of the Treasury says that despite grave issues, a recession at this stage is not likely

A full recession in the US is not “All things are possible” despite an economy that is slowing down, Treasury Secretary Janet Yellen claimed on ABC’s This Week program on Sunday.

As the labor market has recovered and we have reached full employment, it’s natural now that we expect to transition to steady and stable growth,” she said, arguing that while maintaining a strong labor market “It will take talent and luck.,” it’s not impossible.

The Treasury secretary insisted “Consumer spending is strong” despite record lows in consumer confidence. A recent University of Michigan report shows that consumer confidence is at its lowest point of 50.2 points. This statistic has not been seen since the 1980s stagflation period. 

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US consumers feel terrible

According to the Wall Street Journal, 44% believe that a recession will occur within the first year.

During the interview, ABC’s George Stephanopoulos reminded Yellen that she and the administration of US President Joe Biden had been wrong last year when they claimed the uptick in inflation was a transitory phenomenon ahead of what turned out to be its steepest rise in four decades.

Acknowledging that “The inflation rate is unacceptably high” and would remain so for the rest of the year at a minimum, the Treasury secretary placed the blame on “Russia’s war on Ukraine.” She also admitted that sanctions on Moscow over Ukraine are backfiring against average Americans, saying that “There are also some spillovers.

LEARN MORE US economy faces major recession – economists

Yellen’s remarks followed the latest Federal Reserve interest rate hike as the central bank attempts to quell inflation by tamping down on the supply of cheap money. Some experts, including a predecessor of Yellen’s, former Treasury Secretary Larry Summers, believe the economy will get worse before it gets better, as higher interest rates mean steeper debt accumulation. According to Experian, the average American has $96,371 of debt. 



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