Janet Yellen: Treasury Secretary says she sees no signs of recession in the US economy

CNN
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Treasury Secretary Janet Yellen said Thursday in an exclusive interview with CNN that she sees no sign of that recession In the near term, as the US economy rebounded from six months of deflation.

During a face-to-face interview in Ohio aired on CNN’s “Erin Burnett OutFront,” Yellen said third-quarter GDP data released Thursday underlined the strength of the US economy as policymakers move urgently to cool the rampant and spiraling inflation that has had an impact. It sharpened American views on the economy – and put the Democratic majority on Capitol Hill at risk less than two weeks after the midterm elections.

“Look, what we’re seeing now is strong growth this quarter. We are in a fully functional economy,” Yellen said in response to a question about whether the latest GDP data has eased any recession fears. It is very normal for growth to slow down. It has lasted through the first three quarters of this year, but is still doing well. We have a very strong job market. I don’t see signs of recession in this economy at this point.”

Yellen’s optimism comes amid growing concern from economists and financial officials about the possibility of a recession sometime next year, but was based in part on elements of the latest data that showed signs of a necessary slowdown in key areas of the economy. The road to a “soft landing” as the Federal Reserve prepares to continue its rapid pace of rate hikes.

GDP – the broadest measure of economic activity – Increased 2.6% year-over-year during the third quarterAccording to preliminary estimates released Thursday by the Bureau of Economic Analysis. That’s a turnaround from a decline of 1.6% in the first quarter of the year and a negative 0.6% in the second.

But Yellen’s view also underscores the complex balancing act that President Joe Biden and his top economic officials have attempted over the course of this year, as they seek to highlight rapid economic recovery and major legislative victories while also pledging to tackle high prices.

“Inflation is very high — it is unacceptably high and Americans feel that every day,” Yellen said when asked how the administration is aligning its view of the American economy as discontent grows among voters. Yellen acknowledged that it will take time for prices to fall back, saying that efforts to bring prices back to levels “to which people are more accustomed” will likely cover the “next two years.”

It’s a fact that has undermined management’s efforts to cash in on what officials consider a solid track record. When asked about the economy last week, Biden told reporters it was “strong as hell,” drawing criticism from Republicans.

But Yellen agreed with the president’s assessment that the economy remains strong, and stands out compared to how fair it is to other economies around the world.

“If you look around the world, you’ll find a lot of economies that are already suffering not only from high inflation but from very poor economic performance, and the United States stands out. We have unemployment at a 50-year low. … We saw in this morning’s report – spending continued Consumer spending and investment spending are growing. We have strong household finances, business finance, and well-capitalized banks.”

“This is not an economy in recession and we continue to do well,” she added.

Yellen also acknowledged frustration within the administration that efforts to pull the US economy out of crisis didn’t get what credit officials thought it deserved.

“There were many problems we would have had, difficulties that many American families would have,” Yellen said. These are problems we don’t have because of what the Biden administration did. Therefore, one often does not attribute problems that do not exist. ”

Yellen traveled to Cleveland as part of a management campaign to highlight major legislative gains — and the tens of billions of dollars in private investment that those policies have driven into nationwide industrialization.

It’s an important part of an economic strategy designed to address the many vulnerabilities and failures exposed when the Covid-19 virus devastated the world, with significant federal investments in infrastructure and supporting — or creating from scratch — key parts of critical supply chains.

After listing a series of major private sector investments, including the $20 billion Intel factory that opened just a few hours’ drive outside Columbus, Yellen said it was “real tangible investments that are happening now,” though she admitted it would take time to become take effect.

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

“But you’re starting to see repaired bridges come online — not in every community, but very soon. Many communities will see improved roads and repaired bridges that are collapsing. We’re seeing money flow into research and development, which is really an important source of long-term strength for the American economy. She said America would grow stronger and we would become a more competitive economy.

Yellen also addressed the battle lines drawn this week over raising the debt ceiling, Washington’s ongoing crisis of its own making and which House Republicans have once again vowed to leverage for leverage if they take the majority.

“The President and I agree that America should not be held hostage to members of Congress who believe it is acceptable to compromise the credit rating of the United States and threaten to default on US Treasuries, which are the bedrock of global financial markets,” Yellen said. .

But Yellen, who has long highlighted the “devastating” nature of the standoffs, also backtracked on eliminating the debt limit altogether through legislation. A group of House Democrats wrote to Democratic leaders to request this measure in the lame-duck session of Congress, but Biden rejected the idea this week.

When Yellen was asked about the split, she only said that she and Biden agreed that “raising the debt ceiling is up to Congress.”

“It’s absolutely essential that it happens, and I’d like to see it happen the way it could,” Yellen added.

As management moves toward a period of time that traditionally results in senior officials leaving management, she has made it clear that she does not plan to be one of them. When asked about reports she told the White House she wanted to stay in next year, Yellen said it was an “accurate reading.”

“I’m so excited about the show we talked about,” Yellen said. I see it as a great boost to economic growth, tackling climate change, and strengthening American families. And I want to be a part of that.”