File photo dated July 15, 2014 of Federal Chairmain Janet Yellen testifies at a hearing on the Semiannual Monetary Policy Report to the Congress in Washington, DC, USA. Joe Biden is set to nominate Janet Yellen as secretary of the treasury, according to multiple reports on Monday. She would be the first woman in the role and the third Jewish treasury secretary in a row, after President Trump's choice Steven Mnuchin and President Obama's second term pick Jack Lew. Photo by Olivier Douliery/Abaca/Sipa USA(Sipa via AP Images)
Recession – Treasury Secretary Yellen Says Recession Not ‘Inevitable’
Recession in the United States is not “inevitable” but the economy is likely to slow, Treasury Secretary Janet Yellen said Sunday, days after the Federal Reserve hiked interest rates, raising fears of a contraction.
“I expect the economy to slow” as it transitions to stable growth, she told ABC’s “This Week,” but “I don’t think a recession is at all inevitable.”
The U.S. economy has recovered strongly from the damage wrought by COVID-19, but soaring inflation and supply-chain snarls made worse by the war in Ukraine have increased pessimism.
Wall Street stocks tumbled after the central bank, seeking to cool inflation, on Wednesday raised the benchmark borrowing rate by 0.75 percentage points, the sharpest rise in nearly 30 years.
And economists see worrying signs that consumer confidence is weakening, with spending on services affected most sharply.
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People are beginning to hold off on vacation plans – domestic flight bookings were down 2.3 percent last month, Adobe Analytics reported – and are cutting back on restaurant visits, haircuts and home repairs.
Yellen conceded that “clearly inflation is unacceptably high,” attributing it partly to the war in Ukraine, which has pushed up energy and food prices.
But she said she did not believe “a dropoff in consumer spending is the likely cause of a recession.”
The U.S. labour market is “arguably the strongest of the postwar period,” Yellen said, and she predicted a slowing of inflation in the coming months.
For Fed chair Jerome Powell – who succeeded Yellen in that position – to control inflation without weakening the labour market will take “skill and luck,” she said, before adding, “but I believe it’s possible.”
The U.S. economy contracted by 1.5% in the first quarter of this year, its first drop since 2020, and early indications point to a continued slowing in key sectors including manufacturing, real estate and retail sales.
A recent survey of 750 company executives by the Conference Board found 76 percent believed a recession is looming or has already begun.
Source – https://www.newsmax.com/