Treasury Secretary Janet Yellen said Thursday in an exclusive interview with CNN that she saw no signs of a recession in the near term, as the US economy rebounded after six months of 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 at a time when policymakers are pressing to cool inflation. spreading and rising. had a profound effect on Americans’ views on the economy – and put the Democratic majority on Capitol Hill in jeopardy less than two weeks into the midterm elections.
“Look, what we’re seeing now is solid growth this season. Growth has obviously slowed after a very rapid recovery from high unemployment,” Yellen said when asked if the latest GDP data eased any recession concerns. “We’re in a full-employment economy. It’s very natural that growth would slow. And it there are more than three quarters of this year, but it continues to be OK. We have a very strong labor market. I don’t see any signs of a recession in this economy at this time.”
Yellen’s optimism comes amid growing concern from economists and finance officials that a recession is likely at some point in the next year, but was based in part on elements of recent data that showed signs of a slowdown. needed in key areas of the economy leaves open a path for a “soft landing” as the Federal Reserve prepares to continue its rapid pace of rate hikes.
Gross domestic product – the broadest measure of economic activity – increased by an annualized rate of 2.6% during the third quarter, according to preliminary estimates released Thursday by the Bureau of Economic Analysis. This is a turn from a decline of 1.6% in the first quarter of the year and negative 0.6% in the second.
But Yellen’s view also underscored the complex balancing act President Joe Biden and his top economic officials have attempted this year, as they seek to highlight a rapid economic recovery and major legislative victories while also promising to attack prices. rising
“Inflation is very high — it’s unacceptably high and Americans feel that every day,” Yellen said when asked how the administration squared its view of the U.S. economy with rising discontent among voters. Yellen acknowledged that prices would take time to decline, saying efforts to bring them back down to levels “that people are more familiar with” will likely cover “the next couple of years.”
It’s a fact that has diminished the administration’s efforts to take advantage of what officials consider to be a strong record. Biden, asked about the economy last week, told reporters that it was “strong as hell,” drawing criticism from Republicans.
But Yellen agreed with the President’s assessment that the economy remains strong, standing out compared to how other economies around the world are doing.
“If you look around the world, there are a lot of economies that are really suffering not only from high inflation but very weak economic performance, and the United States stands out. We have unemployment at a 50-year low. … We saw in this morning’s report – consumer spending and investment spending continued to grow. We have strong household finances, business finances, well-capitalized banks,” he said.
He added, “This is not an economy in recession and we continue to do well.”
Yellen also acknowledged frustration within the administration that efforts to pull the US economy out of crisis have not received the credit officials believe they deserve.
“There were several problems that we could have, and difficulties that many American families could face,” Yellen said. “These are problems that we don’t have, because of what the Biden administration has done. So, you often don’t get credit for problems that don’t exist.”
Yellen traveled to Cleveland as part of an administration push to highlight major legislative victories — and the tens of billions of dollars in private sector investment those policies have brought to manufacturing across the country.
It is an important part of an economic strategy designed to address many of the vulnerabilities and failures laid out as the Covid-19 ravaged the world, with significant federal investment in infrastructure and support – or create from scratch – key pieces of the supply chain. criticism.
Listing a series of major private sector investments, including the $20 billion Intel plant that opened a few hours’ drive outside Columbus, Yellen said they were “real tangible investments happening right now,” as she recognize that they would take time to take effect.
Yellen promised that these efforts would be felt as they move through the economy in the coming months and years. Asked if the administration’s overall message to Americans was one of patience, Yellen said, “Yes.”
“But you’re starting to see repaired bridges come online – not in every community, but very soon. Many communities will see improved roads, repaired bridges that have collapsed. We’re seeing money flowing into research and development, which is really an important source of long-term strength in the American economy. And America’s strength will increase and we will become a more competitive economy,” he said.
Yellen also addressed the battle lines drawn this week over raising the debt ceiling, a perennial Washington crisis that has seen House Republicans vow once again to use the increase if they take the majority.
“The president and I agree that members of Congress should not hold America hostage who think it’s OK to compromise the United States’ credit rating and threaten default on U.S. Treasuries, which are the basis of global financial markets,” Yellen said. .
But Yellen, who has long emphasized the “destructive” nature of the confrontations, has also backed eliminating the debt limit altogether through legislation. A group of House Democrats wrote to Democratic leaders asking for such action in the congressional session, but Biden rejected the idea this week.
Asked about the division, Yellen said only that she and Biden agreed that it is “really up to Congress to raise the debt ceiling.”
Yellen added: “It’s essential that it happens, and I’d like to see it happen the way it can happen.
As the administration moves into a period of time that traditionally leads to senior officials leaving an administration, he made it clear that he did not plan to be one of them. Asked about the report she informed the White House she wanted to stay into next year, Yellen said it was “an accurate reading.”
“I feel very excited by the program that we talked about,” Yellen said. “And I see in it great strengthening of economic growth and addressing climate change and strengthening American families. And I want to be a part of that.”