Yellen says U.S. recession unlikely, but no drop in gasoline prices soon

U.S. Treasury Secretary Janet Yellen testifies during a House Ways and Means Committee hearing on President Biden’s proposed U.S. budget for 2023, on Capitol Hill in Washington, U.S. June 8, 2022 REUTERS/Jonathan Ernst

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WASHINGTON, June 9 (Reuters) – U.S. Treasury Secretary Janet Yellen said on Thursday she did not expect the U.S. economy to tip into a recession, but growth would “absolutely” slow and prices gasoline are not expected to drop anytime soon.

“I don’t think we (are) going to have a recession. Consumer spending is very strong. Capital spending is strong,” she said at a New York Times Dealbook event.

“I know people are very upset and rightly so about inflation, but there’s no indication that a…recession is on its way.”

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Yellen, who admitted last week that she was wrong in predicting inflation would be transitory, told the event she wouldn’t change U.S. policy decisions if she could go back in time.

“I wouldn’t do it any differently,” Yellen said, saying the $1.9 trillion US bailout package signed by President Joe Biden was needed to save a generation of Americans from suffering high unemployment rates. .

“Things can always happen that you don’t expect. The world is very uncertain,” she said.

Tackling inflation was President Joe Biden’s top priority, Yellen said, adding that she didn’t expect gas prices, which just hit $5 a gallon, to fall any lower. so early.

She said American households were clearly concerned about soaring prices at the pump, which played a key role in shaping consumer expectations, but it was “incredible” to see how pessimistic Americans were about economy as the United States now had the strongest labor market in the world. War Two.

Biden has done “what he can do” to address high gas prices by leading a historic withdrawal from the Strategic Petroleum Reserve, Yellen said. She added that US officials would also continue to tighten sanctions aimed at punishing Russia and getting it to stop the war in Ukraine.

As the Federal Reserve tightened monetary policy to contain demand and lower inflation, Yellen said she saw a path to a soft landing that would avoid a recession.

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Reporting by Eric Beech and Andrea Shalal Editing by Chris Reese and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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