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 recovers from a six-month contraction.
During a one-on-one interview in Ohio that aired on CNN’s “Erin Burnett OutFront,” Yellen said Thursday’s third-quarter GDP data underscored the strength of the U.S. economy as policymakers move urgently to cool rampant and rising inflation. which had a sharp impact on America’s views on the economy – and threatened the Democratic majority on Capitol Hill less than two weeks before the midterm elections.
“Look, what we’re seeing right now is solid growth this quarter.” “Growth has obviously slowed down after a very quick recovery from high unemployment,” Yellen said when asked if the latest GDP data eased any recession concerns. “We are in a full employment economy. It is very natural for growth to slow down. And it has during the first three quarters of this year, but it’s still okay. We have a very strong labor market. I don’t see any signs of a recession in this economy at this point.”
Yelena’s optimism comes amid growing concern among economists and financial officials that a recession is likely at some point next year, but it was partly based on elements of the latest data showing signs of a necessary slowdown in key areas of the economy leaving the path open to a “soft landing” as the Federal Reserve are about to continue the rapid pace of rate increases.
Gross domestic product — the broadest measure of economic activity — rose at an annual rate of 2.6% during the third quarter, according to preliminary estimates released Thursday by the Bureau of Economic Analysis. That’s a turnaround from a 1.6% decline in the first quarter of the year and a negative 0.6% in the second.
But Yelena’s stance also underscored the complex balance 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 promising to tackle rising prices.
“Inflation is very high — it’s unacceptably high and Americans feel it every day,” Yellen said when asked how the administration reconciled its view of the American economy with growing voter discontent. Yellen acknowledged that prices will take time to recover, saying efforts to bring them down to levels “that people are more used to” will likely cover “the next few years.”
That’s a reality that has undermined the administration’s efforts to capitalize on what officials see as a strong 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, standing out against other economies around the world.
“If you look around the world, there are a lot of economies that are really suffering from not only high inflation but very poor economic performance, and the United States stands out.” We have the lowest unemployment in 50 years. … We saw in this morning’s report – consumer spending and investment spending continued to grow. “We have solid household finances, business finances, banks that are well capitalized,” she said.
She 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 U.S. economy out of the crisis have not won credit officials who believe they are worth it.
“There were a few problems that we could have, and difficulties that many families could face with American families,” Yellen said. “These are problems that we don’t have, because of what the Biden administration has done. So, they often don’t take credit for problems that don’t exist.”
Yellen traveled to Cleveland as part of the administration’s effort to highlight major legislative victories — and the tens of billions of dollars in private sector investment that those policies have channeled into manufacturing across the country.
It’s a critical part of an economic strategy designed to address the many vulnerabilities and failures uncovered as Covid-19 ravages the world, with significant federal investment in infrastructure and supporting — or creating from scratch — key parts of critical supply chains.
Citing a number of major private-sector investments, including a $20 billion Intel factory opening a few hours’ drive outside Columbus, Yellen said these are “real tangible investments happening now,” though she acknowledged they will take time to fully take off. come into force.
Jelen promised that these efforts will be felt as they pass through the economy in the months and years ahead. Asked if the administration’s overall message to Americans was patience, Yelen said: “Yes.
“But you’re starting to see repaired bridges come online — not in every community, but pretty quickly.” Many communities will see improved roads, repaired crumbling bridges. We see money flowing into research and development, which is a really important source of the long-term strength of the American economy. And America’s strength will increase and we will become a more competitive economy,” she said.
Yellen also addressed the battle lines drawn this week over raising the debt ceiling, now a perpetual crisis in Washington of my own making, which House Republicans have once again vowed to use as leverage if they take the majority.
“The president and I agree that America should not be held hostage by members of Congress who think it’s okay to compromise the United States’ credit rating and threaten to default on U.S. Treasuries, which are the foundation of global financial markets,” Yellen said. .
But Yellen, who has long emphasized the “destructive” nature of the showdown, also supported a full repeal of the debt limit through legislation. A group of House Democrats wrote to Democratic leaders to demand that action on the floor of Congress, but Biden rejected the idea this week.
Asked about the split, Yellen said only that she and Biden agreed that “it’s really up to Congress to raise the debt ceiling.”
“It is absolutely necessary to do it, and I would like it to happen in the way that it can happen,” added Jelen.
As the administration moves toward a period of time that traditionally sees top officials leave the administration, she has made it clear that she does not plan to be one of them. Asked about reports that she had informed the White House that she wanted to stay next year, Yellen said that was an “accurate reading.”
“I feel very excited about the program we talked about,” Yellen said. “And I see that as a big boost to economic growth and addressing climate change and strengthening American households.” And I want to be a part of that.”