The US economy will slow, but a recession is not inevitable, says Janet Yellen

U.S. Treasury Secretary Janet Yellen said Sunday she expects the economy to slow, but a recession is not “inevitable at all.”

“I expect the economy to slow down, it is growing very fast as the labor market recovers and we have reached full employment,” Yellen told ABC’s. This week. “We expect a transition to stable and stable growth, but I don’t think a recession is inevitable at all.”

She said US President Joe Biden’s top priority was to lead inflation down, which she reiterated was “unacceptably high.”

The US Federal Reserve responded this week. raising its key interest rate by a historic 0.75 percentage points for the first time since 1994.

The Fed has also laid the groundwork for a much tighter monetary policy in the short term, with officials forecasting interest rates to rise to 3.8 percent in 2023, with most of those increases planned for this year. Now they range between 1.50% and 1.75%.

On Saturday, Fed Governor Christopher Waller said he would support a new 0.75 percentage point increase in interest rates at the next central bank meeting in July if data shows that inflation has not slowed enough.

Fed Chairman Jay Powell said his goal was to reduce inflation while maintaining a strong labor market.

“It will take skill and luck, but I believe it is possible,” Yellen said.

The finance minister said that although there was monthly volatility in consumer spending, it generally remained strong and she did not expect a drop in spending to cause a recession.

“It is clear that most consumers, even lower-income households, continue to have buffer stocks of savings that will allow them to keep costs down,” she said. “I don’t see a drop in consumer spending as a likely cause of the recession in the coming months.”

The labor market also remains strong, she said, with two jobs for each unemployed worker.

Yellen reiterated the Biden administration’s argument that Russia’s war against Ukraine is partly to blame for high inflation as it raises global food and energy prices. According to her, the growls in the supply chain from the blockade in China also contribute. Although these factors will not change immediately, she said she expects inflation to fall.

“I expect inflation to slow down in the coming months, but remember that there are so many uncertainties about global events,” she said.

Biden is also seeking to cut gas prices, and senior officials said Sunday that the United States is considering a temporary pause on the federal gas tax.

Yellen said it was “an idea certainly worth considering” and that Biden wanted to work with Congress to try to cut gas prices.

Energy Secretary Jennifer Granholm told CNN that the Biden administration was evaluating a proposal for a gas tax.

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