Yellen says US recession not ‘inevitable’ but expects ‘economy to slow’ | US politics

Joe Biden’s Treasury Secretary Janet Yellen says she expects ‘the economy to slow’ but continues to insist that a full-scale recession is ‘not at all inevitable”.

Yellen’s remarks on Sunday came days after the U.S. central bank decided to raise interest rates sharply in a bid to contain soaring inflation.

She told ABC This Week host George Stephanopoulous that her financial outlook is a result of the way the economy has been “growing at a very rapid pace, while the economy, as a job market, has recovered and that we have reached full employment”.

“It’s natural now that we expect a transition to steady, stable growth, but I don’t think a recession is at all inevitable,” Yellen added.

Pressed on the issue of inflation, which polls show is a top priority for American voters ahead of the midterm elections in November, Yellen said the causes of inflation are global, and non-local, and that these factors are not expected to diminish immediately.

Yellen said some trade tariffs on China inherited from former President Donald Trump’s administration made “no strategic sense.” She added that Biden was looking at them as a way to lower inflation.

“Obviously inflation is at an unacceptable level,” Yellen said. “It’s President Biden’s top priority to bring him down.”

U.S. Central Bank President Jerome Powell also said “it’s his goal to bring it down while maintaining a strong labor economy,” according to Yellen.

The comments from Biden’s top economist reflect the administration’s ongoing efforts to change the national narrative around the economy.

Yellen’s comments were more in line with this push than they have been recently.

Last month, she broke away from the administration’s favorite talking points when she admitted to the American public that she was “wrong” about the path inflation would take.

A recent survey of economic confidence showed steep declines, with Gallup recording the lowest reading during the coronavirus pandemic, and it’s likely the lowest confidence has been since the end of the Great Recession in early 2009.

Dissatisfaction with Biden’s handling of the economy could spill over to the midterm elections.

Yellen was not the only Sunday to present a more optimistic economic message than the recessionary narrative that most US economists present. A survey of economists published by the Wall Street Journal on Sunday raised the probability of a recession to 44% over the next 12 months – a level of probability which, according to the newspaper, is “generally observed only in edge or during an actual recession”.

National Economic Council Director Brian Deese told Margaret Brennan on CBS’s Face the Nation that the United States “is in an uncertain moment and we face real challenges, global challenges.”

“We need to navigate through this transition in a way that takes us to stable growth without giving up all the incredible economic gains we’ve made,” he said.

Pressed on how the administration plans to bring inflation down, hitting a 40-year high of 8.6% and forecast by the Congressional Budget Office to remain high through 2024, Deese said a set legislation was being prepared in Congress to reduce prescription drug costs. , the costs of public services and the adoption of tax reforms.

“If we can do a package like that, we can move forward in the near future,” Deese said. “This will not only help bring prices down, but it will send a signal to markets and the global economy that the United States is really, really serious about tackling this inflation.”

In a rare one-on-one interview last week, Biden laid out his administration’s public line.

“First of all, it’s not inevitable,” he told The Associated Press. “Second, we are in a stronger position than any nation in the world to overcome this inflation.”

As clouds have gathered over the economic situation in the United States over the past 18 months, the administration’s economic officials and central bankers have reformed their message on inflation from “transitional” to an economy. , as Deese said, who is “in transition”.

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