US economy slows, but recession not inevitable, Yellen says

WASHINGTON, July 24 (Reuters) – U.S. Treasury Secretary Janet Yellen said on Sunday U.S. economic growth was slowing and she acknowledged the risk of a recession, but she said a slowdown was not inevitable .

Yellen, speaking on NBC’s “Meet the Press,” said strong hiring numbers and consumer spending showed the U.S. economy was not currently in a recession.

Hiring in the United States remained robust in June, with 372,000 jobs created and the unemployment rate holding steady at 3.6%. It was the fourth consecutive month of job gains above 350,000. Read more

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“It’s not an economy that’s in a recession,” Yellen said. “But we are in a transition period where growth is slowing and that is necessary and appropriate.”

Still, data from last week suggested the labor market was softening, with new jobless claims hitting their highest level in eight months. Read more

Yellen said inflation “is way too high” and recent interest rate hikes by the Federal Reserve have helped keep the price spike in check.

Additionally, the Biden administration is selling oil from the Strategic Petroleum Reserve, which Yellen says has already helped push down gas prices.

“We’ve seen gas prices the last few weeks drop about 50 cents (a gallon) and there should be more in the pipeline,” she said.

Yellen, who was previously chairman of the Federal Reserve, hopes the Fed can cool the economy enough to lower prices without triggering a widespread economic slowdown. Read more

“I’m not saying we’re definitely going to avoid a recession,” Yellen said. “But I think there is a path that keeps the labor market strong and lowers inflation.”

U.S. gross domestic product, a broad measure of economic health, shrank at an annual rate of 1.6% in the first quarter, and a report released Thursday is expected to show a gain of just 0.4% in the second quarter, according to sources. economists polled by Reuters. .

Yellen said that even if the second quarter figure is negative, it would not signal that a recession has set in, given the strength of the labor market and strong demand.

“Recession is generalized weakness in the economy. We don’t see that now,” she said.

Journalists, some economists and analysts have traditionally defined a recession as two consecutive quarters of GDP contraction. But the private research group that is the official arbiter of US recessions instead looks at a wide range of indicators, including jobs and spending. Read more

Brian Deese, director of the White House National Economic Council, said on Twitter on Sunday that the upcoming second-quarter numbers would be “retrospective,” which he called important context. “Hiring, spending and production data look strong,” he said.

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Reporting by Joel Schectman and David Lawder; Editing by Lisa Shumaker and Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

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