U.S. Treasury Secretary Janet Yellen acknowledged on Sunday that U.S. economic growth was slowing and there was a risk of a recession but said a slowdown was inevitable. Yellen said on NBC’s Meet the Press that strong U.S. job numbers and consumer spending indicate the U.S. economy is not currently in recession. US employment remained strong in June, adding 372,000 jobs and taking the unemployment rate to 3.6%. It is the fourth month in a row that the number of employees exceeds 350,000. This is not an economy in recession, said Yellen, the former chairman of the Federal Reserve.
Former Fed Chair Yellen hopes the central bank will cool the economy enough to keep prices down without triggering a wider recession. I’m not saying we can definitely avoid a recession, but I think there are ways to keep the job market strong and keep inflation under control, Yellen said. Economists polled by Reuters said U.S. GDP contracted at an annualized rate of 1.6% in the first quarter and is expected to show a slight 0.4% increase in the second quarter, according to Thursday’s report. Yellen said given the strength of the job market and strong demand, even negative numbers in the second quarter would not indicate the start of a recession.
But we are in a period of slowing growth and it is necessary and appropriate. Still, last week’s data showed the labor market was softening as initial unemployment claims hit an eight-month high. Yellen said inflation was too high and said the Fed’s recent rate hikes had helped keep prices down. Additionally, the Biden administration is selling oil from its Strategic Oil Reserve, which Yellen says has already helped keep gas prices down. We’ve seen gas prices drop about 50 cents (a gallon) in the last few weeks, and there should be more in the pipeline, she said.
Recession is a widespread weakness in the economy. We don’t see it now, she said. While economists have traditionally defined a recession as two consecutive quarters of recession, the private-sector group that serves as the official arbiter of the U.S. recession is looking at a wide range of indicators.