By John Ikani
US Treasury Secretary Janet Yellen said on Sunday that she doesn’t think a recession is inevitable, although she does expect the economy to slow down.
“I expect the economy to slow, it’s been growing at a very rapid rate as the labour market has recovered and we’ve reached full employment,” Yellen said on ABC’s This Week. “We expect a transition to steady and stable growth but I don’t think a recession is at all inevitable.”
The US economy has recovered strongly from the Covid-19 damage, but soaring inflation and supply-chain snarls exacerbated by the war in Ukraine have increased pessimism.
Wall Street stocks tumbled after the US central bank 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 people beginning to hold off on vacation plans, dining out or doing home repairs.
Yellen stressed that President Biden and Federal Reserve chair Jerome Powell’s top priority is to bring inflation down while maintaining a strong labor market, adding that she doesn’t think a recession will happen.
“That’s going to take skill and work,” she said. “But I believe it’s possible. I don’t think recession is inevitable.”
Yellen further noted that consumer spending remains strong, though there are some concerns over high fuel and energy prices.
“There’s month-to-month volatility, but overall spending history is gone, although having some spending are changing and higher fuel and energy prices are certainly affecting consumers and making them change their patterns of spending,” Yellen said.
Biden also said on Thursday that he believes a recession is “not inevitable” in remarks one day after the Federal Reserve announced it would hike interest rates at the fastest pace in nearly 30 years.
“First of all, it’s not inevitable,” Biden told The Associated Press. “Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.”
