Treasury Secretary Janet Yellen stated Thursday the U.S. economy is in a state of transition, not recession, despite two consecutive quarters of damaging 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 non-public sector exercise.
“That is not what we are seeing right now,” she stated throughout a day information convention at 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% in the second quarter.
Coming on the heels of a 1.6% contraction in the first quarter, the two straight declines meet a generally used definition of recession. The National Bureau of Economic Research, nonetheless, is the official arbiter of recessions, and sure 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 greater impediment, rising to 9.1% in June whereas financial progress has didn’t sustain. Consumer and enterprise confidence ranges have plunged, with current surveys exhibiting a strong majority of Americans imagine the nation is in recession.
Yellen acknowledged the burden that increased costs carry and stated the administration is “laser-focused” on addressing the scenario.
“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 stated. “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 potentialities of a new invoice that Democratic lawmakers apparently have agreed on to battle inflation. The laws is aimed toward elevating tax income, reducing drug prices and investing in renewable power.
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 12 months, for a whole of two.25 proportion factors, and sure will add extra will increase later in the 12 months.
Yellen attributed rising inflation to the battle in Ukraine, provide chain issues and the Covid pandemic. She did not talk about the affect that financial and monetary stimulus had on worth pressures.