Treasury Secretary Janet Yellen said on Thursday the US economy was in a state of transition, not recession, despite two straight quarters of unfavorable expansion.
The recession, Yellen insisted, is a “widespread weakening of our economy” that includes massive layoffs, business closures, family price lines and a slowdown in private sector employment.
“That’s not what we’re seeing right now,” she told a Treasury briefing day. “When you look at the economy, job creation continues, household finances remain strong, consumers are spending and businesses are growing.”
Those comments, however, came the same day the Commerce Department’s Bureau of Economic Analysis reported that gross domestic product, the broadest measure of monetary employment, fell 0.9% in the second quarter. .
After a contraction of 1.6% in the first quarter, the two direct declines meet a generally used definition of a recession. The National Bureau of Economic Research, on the other hand, is the respectable arbiter of recessions, and it likely wouldn’t rule for months.
Yellen began his remarks with a list of management’s financial achievements, including an increase in nonfarm payrolls of more than $9 million.
But inflation confirmed the biggest hurdle, hitting 9.1% in June as financial widening failed to sustain itself. Consumer and retailer sentiment levels have plunged, with new surveys showing that a majority of Americans see the country as in a recession.
Yellen mentioned the weight that the high prices are increasing and said management is “laser-focused” to take care of the location.
“We have entered a new phase in our recovery focused on achieving steady and stable growth without sacrificing the gains of the past 18 months,” she said. “We know there are challenges ahead. Growth is slowing globally. Inflation remains unacceptably high, and it is this administration’s top priority to bring it down.
President Joe Biden and Yellen have each touted the odds of a new bill that Democratic lawmakers appear to have agreed on to fight inflation. The settlement aims to increase tax revenue, reduce drug prices and invest in renewable energy.
Yellen noted that while the Federal Reserve, which she chaired from 2014 to 2018, has “the lead role in reducing inflation, the president and I are committed to taking action to cut costs and protect Americans. global pressures we face”.
The Fed has hiked rates four times this year, for a total of 2.25 equity issues, and will likely come online with more increases later in the year.
Yellen attributed the emerging inflation to the war in Ukraine, supply chain issues and the Covid pandemic. She did not talk about the effect the financial and monetary stimulus had on value pressures.