Dry Treasury. Janet Yellen acknowledges economic ‘slowdown’ but downplays recession fears

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Treasury Secretary Janet Yellen acknowledged on Sunday that the United States was experiencing an economic “slowdown” but played down the potential for a recession, arguing that the country is in a “transition” period after rapid economic growth.

“The economy is slowing down,” Yellen said on NBC News’ “Meet the Press,” adding that a correction is “appropriate” for a healthy economy.

“The labor market is now extremely strong,” she said. “It is not an economy that is in recession, but we are in a transition period where growth is slowing down. And it’s necessary and appropriate, and we need to grow steadily and sustainably. So there is a slowdown, and businesses can see that and that’s normal, given that people now have jobs and we have a strong labor market. »

“But you don’t see any of the signs now – a recession is a broad-based contraction that affects many sectors of the economy. We just don’t have that,” she added. “I would say that we are witnessing a slowdown. »

Treasury Secretary Janet Yellen testifies before the House Ways and Means Committee on Capitol Hill in Washington, June 8, 2022. (AP Photo/Jose Luis Magana, File/AP Newsroom)

Yellen went on to say that a “common definition” of a recession is two consecutive quarters of negative GDP, and although economists expect to see negative growth again this quarter after seeing -1.4% in last quarter, that still wouldn’t mean the US is in a recession.

SINCE THE BIDEN ADMINISTRATION CALLED INFLATION ‘TRANSITIONAL,’ THE US HAS SEEN 13 MONTHS COST UTILITIES IN FULL Boom

“Even though that number is negative, we’re not in a recession right now, and we shouldn’t characterize this as a recession,” she said.

Janet Yellen and Joe Biden

US Treasury Secretary Janet Yellen (C) listens to President Joe Biden during a hybrid meeting with business leaders and members of his cabinet to discuss the impending federal debt limit in the South Court Auditorium at the ‘Eisenhower Executive (Chip Somodevilla/Getty Images/Getty Images)

NBC anchor Chuck Todd pushed back, saying the secretary was “splitting hairs” over the definition.

“I mean, if the technical definition is two quarters of contraction, you’re saying it’s not a recession,” Todd said.

“That’s not the technical definition,” Yellen explained. “There’s an organization called the National Bureau of Economic Research that looks at a wide range of data to decide whether or not there’s a recession, and most of the data that they’re looking at right now continues to be strong. I would be surprised if the NBER declared this period a recession, even though it happens to have two quarters of negative growth. We have a very strong labor market. When you’re creating nearly 400,000 jobs a month, that’s not a recession. ”

Yellen’s comments come as Obama’s former economic adviser Larry Summers told CNN Sunday that “there is a very high probability of a recession” and that it is “very unlikely” that the United States will experience a “soft landing”. Last month, Summers warned that a recession is “nearly inevitable, probably 75%, 80% chance within the next two years, and there’s definitely a real risk that it will come sooner.” »

Janet Yellen sits next to President Biden during a Cabinet meeting

President Joe R. Biden speaks with Treasury Secretary Dr. Janet Yellen during a cabinet meeting in the Cabinet Room. (Sarah Silbiger for The Washington Post via Getty Images/Getty Images)

The United States has seen 13 straight months of soaring inflation since the Biden administration, including Yellen, dismissed concerns about rising costs and said the contributing factors were “transient”. »

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Yellen admitted in May this year that she was “wrong then about the path inflation would take. »

Inflation soared to 9.1% in June, marking the fastest pace of inflation since December 1981.

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