U.S. economy slowing, but recession not inevitable, Yellen says

WASHINGTON, July 24 (Reuters) – U.S. Treasury Secretary Janet Yellen mentioned on Sunday that U.S. financial development is slowing and he or she acknowledged the danger of a recession, however she mentioned a downturn was not inevitable.

Yellen, talking on NBC’s “Meet the Press,” mentioned sturdy hiring numbers and client spending confirmed the U.S. economic system isn’t at the moment in recession.

U.S. hiring remained strong in June, with 372,000 jobs created and the unemployment fee holding at 3.6%. It was the fourth straight month of job positive factors in extra of 350,000. learn extra

“This isn’t an economic system that’s in recession,” mentioned Yellen. “However we’re in a interval of transition wherein development is slowing and that’s mandatory and acceptable.”

Nonetheless, knowledge final week steered the labor market was softening with new claims for unemployment advantages hitting their highest level in eight months. learn extra

Yellen mentioned inflation “is method too excessive” and up to date Federal Reserve rates of interest hikes had been serving to to convey hovering costs again in examine.

As well as, the Biden administration is promoting oil from the Strategic Petroleum Reserve, which Yellen mentioned has already helped decrease fuel costs.

“We have seen fuel costs simply in current weeks come down by about 50 cents (a gallon) and there must be extra within the pipeline,” she mentioned.

Yellen, who beforehand served as chair of the Federal Reserve, hopes the Fed can cool the economic system sufficient to convey down costs with out triggering a broad financial downturn. learn extra

“I am not saying that we are going to undoubtedly keep away from a recession,” Yellen mentioned. “However I believe there’s a path that retains the labor market sturdy and brings inflation down.”

U.S. gross home product, a broad measure of financial well being, shrank at a 1.6% annual fee within the first quarter, and a report on Thursday is anticipated to indicate a achieve of simply 0.4% within the second quarter, based on economists polled by Reuters.

Yellen mentioned that even when the second-quarter determine is damaging, it could not sign {that a} recession has taken maintain, given the power within the job market and powerful demand.

“Recession is broad-based weak spot within the economic system. We’re not seeing that now,” she mentioned.

Journalists, some economists and analysts have historically outlined a recession as two consecutive quarters of GDP contraction. However the non-public analysis group that’s the official arbiter of U.S. recessions appears at a broad vary of indicators as an alternative, together with jobs and spending. learn extra

Brian Deese, director of the White Home Nationwide Financial Council, mentioned on Twitter on Sunday that the upcoming second-quarter figures could be “backward trying,” which he known as vital context. “Hiring, spending, and manufacturing knowledge look strong,” he mentioned.

Reporting by Joel Schectman and David Lawder; Modifying by Lisa Shumaker and Leslie Adler

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