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 pulled back from six months of contraction.
During a one-on-one interview in Ohio that aired on CNN’s “Erin Burnett OutFront,” Yellen said the third-quarter GDP data released Thursday underscored the strength of the U.S. economy. had a sharp effect on American views of the economy – and endangered the Democratic majority on Capitol Hill less than two weeks before the midterm elections.
“Look, what we’re seeing now is solid growth this quarter. Growth has obviously slowed after a very rapid recovery from high unemployment,” Yellen said when asked if the latest GDP data indicated any recession concerns. “We are in a full employment economy. It is very natural that growth would slow down. And it has over the first three quarters of this year, but it continues to be good. We have a very strong labor market. I do not see any signs of a recession in the economy at this point.”
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 partly based on elements of recent data that showed signs of a needed slowdown in key areas of The economy is left open. Road to a “soft landing” as the Federal Reserve prepares to continue its rapid pace of rate increases.
Gross domestic product – the broadest measure of economic activity – rose at an annualized rate of 2.6% during the third quarter, according to initial estimates released Thursday by the Bureau of Economic Analysis. This is a turnaround from a decline of 1.6% in the first quarter of the year and negative 0.6% in the second.
But Yellen’s opinion also underscored the complex balancing act President Joe Biden and his top economic officials have attempted over the course of this year, as they seek to highlight a rapid economic recovery and major legislative victories, while also pledging to Fight the rising prices.
“Inflation is very high — it’s unacceptably high and Americans feel that every day,” Yellen said when asked how the administration has improved its view of the U.S. economy with rising discontent among voters. Yellen acknowledged that prices will take time to recover, saying that efforts to bring them back to levels “that people are more accustomed to” will likely cover “the next couple of years.”
That’s a reality that has undercut the administration’s efforts to capitalize on what officials see as a strong record. Asked about the economy last week, Biden told reporters it was “strong as hell,” sparking 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 holding up.
“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 a 50-year low unemployment. … We saw In this morning’s report – consumer spending and investment spending continued to grow. We have solid household finances, business finances, banks that are well capitalized,” she said.
She added, “This is not an economy that is in recession and we continue to do well.”
Yellen also acknowledged frustration in the administration that efforts to withdraw the U.S.
“There were some problems that we could have had, and difficulties many families American families could have faced,” Yellen said. “These are problems that we don’t have because of what the Biden administration has done. So often, people don’t get credit for problems that don’t exist.
Yellen traveled to Cleveland as part of an administration push to highlight major legislative gains — and the tens of billions of dollars in private sector investment the policies have driven into manufacturing around the country.
It is a critical part of an economic strategy designed to address many vulnerabilities and failures laid bare as Covid-19 ravages the world, with significant federal investments in infrastructure and shoring up – or creating from scratch – key parts of critical supply chains.
Listing a series of major private sector investments, including the $20 billion Intel plant opening a few hours outside of Columbus, Yellen said they were “real tangible investments happening right now,” even as she acknowledged they would take Time to take effect.
Yellen promised that these efforts will be felt as they move through the economy in the months and years ahead. Asked if the administration’s general 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 pretty soon. Many communities are going to see roads improved, bridges repaired that have been falling apart. We’re seeing money flow into research and development, which is really a important source of long-term strength for the American economy. And the strength of America will increase and we will become a more competitive economy,” she said.
Yellen also addressed the battle lines drawn this week over raising the debt ceiling, a now-perpetual Washington crisis of its own making, which House Republicans have once again vowed to use for leverage if they take the majority.
“The President and I agree that America should not be held hostage by members of Congress who think it’s okay to compromise the credit rating of the United States and to threaten default on U.S. .
But Yellen, who has long emphasized the “destructive” nature of the showdowns, also supported avoiding the debt limit entirely through legislation. A group of House Democrats wrote to Democratic leaders to request the action in the lame duck session of Congress, but Biden rejected the idea this week.
Asked about the split, Yellen said only that she and Biden agreed that it was “really up to Congress to raise the debt ceiling.”
“It is absolutely essential that this be done, and I would like to see it happen however it can happen,” Yellen added.
As the administration moves into a time when traditionalists lead top officials to leave an administration, she made it clear that she did not plan to be one of them. Asked about reports that she had informed the White House she wanted to stay on 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 this great strengthening of economic growth and addressing climate change and strengthening American households. And I want to be part of that.”