Treasury Secretary Janet Yellen said in an exclusive interview with CNN on Thursday that she saw no signs of a recession in the near term as the US economy recovered from a six-month contraction.
In a one-on-one interview from 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, which policymakers urgently need to cool widespread and rising inflation. It had a profound effect on views of the US economy and threatened the Democratic majority on Capitol Hill less than two weeks after the midterm elections.
“Look, what we’re seeing right now is strong growth this quarter. “Growth has obviously slowed down after a very quick recovery from high unemployment,” Yellen said when asked if the latest GDP data had eased recession concerns. , but it’s still going well. We have a very strong labor market. I don’t see any signs of a recession in this economy right now.”
Yellen’s optimism comes amid growing concerns from economists and financial officials that a recession could be imminent next year, but was partly based on elements of recent data showing signs of a much-needed slowdown in key areas of the economy. path to a “soft landing” as the Federal Reserve prepares to continue the rapid pace of rate hikes.
Gross domestic product — the broadest measure of economic activity — increased at an annual rate of 2.6 percent in the third quarter, according to preliminary estimates released Thursday by the Bureau of Economic Analysis. This is a reversal of the 1.6% decrease in the first quarter of the year and the negative 0.6% in the second.
But Yellen’s comments also underscored the complex balancing act that 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 pledging to tackle rising prices.
“Inflation is very high — it’s unacceptable and Americans feel that every day,” Yellen said of how the administration presented its vision for the U.S. economy amid widespread disagreement among voters. Yellen acknowledged that it would take time for prices to bounce back, saying that efforts to get them back to “the level that people are used to” would take “years to come.”
It’s a reality that has undercut the administration’s efforts to capitalize on what officials see as a strong record. Biden, when asked about the economy last week, told reporters that it is “as strong as it gets,” drawing criticism from Republicans.
But he agreed with President Yellen’s assessment that the economy remains strong, compared to how other economies around the world are doing.
“If you look at the world, there are many economies that are experiencing not only high inflation but very weak economic performance, and the United States stands out. Unemployment is 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, corporate finances, well-capitalized banks,” he said.
He added: “This is not an economy in recession and we are still doing well.”
Yellen also acknowledged frustration within the administration that efforts to pull the US economy out of the crisis have not received the credit officials believe they deserve.
“We could have had a lot of problems, and many families have had difficulties that American families have,” Yellen said. “These are problems that we don’t have, because of what the Biden administration has done. Therefore, often no credit is obtained at all for problems that do not exist”.
Yellen traveled to Cleveland as part of an administration push to highlight major legislative wins, and the billions of dollars in private sector investment those policies have spurred into manufacturing across the country.
It is a critical part of an economic strategy designed to address the many vulnerabilities and flaws exposed as Covid-19 ravaged the world by making significant federal investments in infrastructure and protecting or creating from scratch key pieces of critical supply chains.
Listing some major private sector investments, including the $20 trillion Intel plant opening hours from Columbus, Yellen said they were “real, tangible investments happening now,” though she acknowledged they would take time to take effect.
Yellen pledged that these efforts would be felt throughout 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 bring the repaired bridges online, not in every community, but soon. Many communities will see improved roads, crumbling bridges repaired. We’re seeing money flowing into research and development, which is a really important long-term source of strength for the American economy. And America’s strength will increase and we will become a more competitive economy,” he said.
Yellen also touched on the battle lines drawn this week over raising the debt ceiling, now Washington’s own perennial crisis, which House Republicans have again pledged to use for leverage if they take a majority.
“The president and I agree that America should not be held hostage by members of Congress who think it’s OK to jeopardize the US credit rating and threaten US Treasury default,” Yellen said. .
But Yellen, who has long highlighted the “devastating” nature of the outbreak, has also ruled out removing the debt limit entirely through legislation. A group of House Democrats wrote to Democratic leaders urging that action during the lame-duck session of Congress, but Biden rejected the idea this week.
Asked about the split, Yellen said she and Biden agreed that “it’s really up to Congress to raise the debt ceiling.”
“It’s absolutely imperative that it be done, and I’d like to see it happen as much as possible,” Yellen added.
As the administration heads into a period of time that leads to high-ranking officials leaving an administration, he made it clear that he had no intention of being one of them. Asked about reports that she told the White House she wanted to stay next year, Yellen said it was an “accurate read.”
“I feel very excited about the program that we talked about,” Yellen said. “And in that I see a great strengthening of economic growth and combating climate change and strengthening American homes. And I want to be a part of that.”