Treasury Secretary Janet Yellen said in an exclusive interview with CNN on Thursday that she sees no signs of a recession in the near future as the US economy rebounds from a six-month contraction.
In a one-on-one interview in Ohio that aired on “Erin Burnett OutFront,” Yellen said Thursday’s third-quarter GDP data shows the strength of the U.S. economy as policymakers urgently need to cooling inflation and increasing inflation are moving. has had a devastating impact on how Americans view the economy and has jeopardized the Democratic majority on Capitol Hill less than two weeks after the midterm elections.
“So what we’re seeing right now is solid growth this quarter. Growth has clearly slowed after a very quick recovery from high unemployment,” Yellen said when asked if the latest GDP data allayed any recession concerns. “We are in a full employment economy. It is very natural that growth slows down. And it has more than the first three quarters of this year, but it is good. We have a very strong labor market. At the moment, I don’t see any signs of a recession in this economy.”
Yellen’s optimism comes amid growing concern among economists and finance officials about the possibility of a recession at some point next year, but partly based on elements of recent data that show signs of a needed slowdown in key areas of the economy. path to a “soft landing” as the Federal Reserve prepares to continue its rate hike.
Gross domestic product — the broadest measure of economic activity — grew at an annualized rate of 2.6 percent in the third quarter, according to preliminary estimates from the Bureau of Economic Analysis released Thursday. This is a turnaround from a 1.6% decline in the first quarter of the year and a negative 0.6% in the second quarter.
But Yellen’s views also underscored a complex balancing act that President Joe Biden and his top economic officials have attempted this year as they seek to tout a rapid economic recovery and major legislative wins, while also promising to to fight the rise in prices.
“Inflation is too high — it’s unacceptable, and Americans feel it every day,” Yellen said when asked how the administration would balance its view of the U.S. economy with growing voter discontent. Yellen acknowledged that it will take time for rates to come down, and said that efforts to get them back to levels that “people are more used to” would likely take “the next couple of years.”
That’s a reality that has undermined the administration’s efforts to use what officials see as a solid record. Asked about the economy last week, Biden told reporters it was “strong as hell,” drawing criticism from Republicans.
But Yellen agreed with the president’s assessment that the economy remains strong compared to how other economies around the world fair.
“If you look around the world, there are many economies that are actually suffering not only from high inflation, but from very weak economic indicators, and the United States is no exception. We have the lowest unemployment rate in the last 50 years. … We saw in this morning’s report that consumer spending and investment increased. We have strong household finances, business finances and well-capitalized banks,” he said.
He added, “This is not an economy that is in recession and we continue to do well.”
Yellen also acknowledged frustration within the administration that efforts to pull the US economy out of the crisis have not caught on with debt officials.
Yellen said, “There were a number of challenges that we could have had and challenges that many American families were facing.” “These are problems that we don’t have because of what the Biden administration has done. So, too often, we don’t get credit for problems that don’t exist.”
Yellen traveled to Cleveland as part of the administration’s push to highlight major legislative wins — and the tens of billions of dollars in private sector investment those policies have brought to manufacturing across the country.
This is an important part of the economic strategy, which is designed to overcome many of the vulnerabilities and failures that have been left when the Covid-19 ravages the world, with significant federal investments in infrastructure and strengthening – or from scratch – key parts of critical supply chains.
A number of major private sector investments, including a $20 billion Intel plant that opened a few hours outside of Columbus, Yellen said were “real, real investments that are happening now,” though she acknowledged that it will take full effect. it takes time to do them.
Yellen promised that these efforts will be felt in the coming months and years. Asked if the administration’s overall message to Americans was patience, Yellen said, “Yes.”
“But you’re seeing repaired bridges come online — not in all communities, but soon. Many communities are seeing improvements to roads, repairs to bridges that have fallen into disrepair. We see money flowing into research and development, which is really an important source of long-term strength for the American economy. And America’s power will grow, and we will become a more competitive economy,” he said.
Yellen also addressed the battle lines that emerged this week over raising the debt ceiling, a perennial Washington crisis, which House Republicans have again vowed to use for leverage if they win a majority.
Yellen said: “The president and I agree that America should not be held hostage by members of Congress who are right to stabilize the United States’ credit rating and the threat of default on U.S. Treasuries, which are the backbone of global financial markets.” .
But Yellen, who has long emphasized the “disruptive” nature of the shows, also supported lifting the debt limit through legislation. A group of congressional Democrats wrote a letter to Democratic leaders to ask for the action during the lame-duck session of Congress, but Biden rejected the idea this week.
Asked about the allocation, Yellen said only that she and Biden agreed that “it’s really up to Congress to raise the debt ceiling.”
“It’s absolutely critical that this is done, and I want to see it done that way,” Yellen said.
As the administration moves into a period where senior administration officials typically leave, he has made it clear that he has no plans to be one of them. Asked about reports that she has told the White House she wants to stay on next year, Yellen said that was an “accurate reading.”
“I’m very excited about the program that we talked about,” Yellen said. “And I see that as a huge boost to economic growth and addressing climate change and strengthening American households. And I want to be a part of that.”