US recession not ‘inevitable’, but inflation ‘unacceptably high’, says Treasury Secretary Yellen

U.S. Treasury Secretary Janet Yellen testifies in front of a House Ways and Means Committee hearing on President Biden’s proposed 2023 U.S. budget on June 8, 2022, on Capitol Hill in Washington.

Jonathan Ernst | Reuters

Treasury Secretary Janet Yellen said on Sunday that the recession many Americans fear is “not quite imminent”.

Talks of a recession have intensified this year as inflation remains high and the Federal Reserve has taken aggressive measures to counter it. On Wednesday, the Fed announced an interest rate hike of 75 basis points, the biggest since 1994. Fed Chairman Jerome Powell also signaled the Federal Open Market Committee’s intention to continue its aggressive path of tightening monetary policy to curb inflation.

Also, many people expect a combination of flexibility in consumer spending And job growth To save America from recession.

“I expect the economy to slow down,” Yellen said in an interview with ABC.This week“It is growing very rapidly, as the economy, as the labor market recovers and we reach full employment. It is natural now that we expect the transition to steady and steady growth, but I Don’t think a recession is inevitable at all.”

While Yellen seemed optimistic about escaping a recession, the global economy still faces serious threats in the coming months with the ongoing war in Ukraine, rising inflation and the COVID-19 pandemic. “Clearly, inflation is unacceptably high,” Yellen said.

Still, she doesn’t believe a decline in consumer spending will cause a recession. Yellen told ABC News that the US labor market is at its strongest in the post-war period and predicted inflation would slow “in the coming months.”