U.S. Treasury Secretary Janet Yellen offered an optimistic view on the U.S. economy on Thursday (28th), arguing that the U.S. economy is moving toward more stable and sustainable growth, and refuted the view that the economy has fallen into recession.
“We do see a significant slowdown in growth, but the real recession is broad-based weakness, and we’re not seeing that at the moment,” Yellen told a news conference.
Asked if she thought the Fed’s crackdown on inflation would inevitably lead to a sharp rise in unemployment, Yellen was as optimistic, believing there was a way to keep the labor market strong while keeping inflation down.
Yellen continued to emphasize the good side of the economy, including continued job creation, strong household finances, consumer spending and business growth, with 1.1 million new jobs added in the second quarter alone, the same as the average for the first three months of previous recessions. The performance of the loss of 240,000 is in stark contrast.
U.S. gross domestic product shrank for two straight quarters in the second quarter on Thursday, meeting the definition of a “technical recession,” but the White House continued to push back against the recession, citing strong job growth and consumer spending.
Yellen believes that it is important to understand the situation outside the numerical framework in the report. Overall, this report shows that the US economy is gradually transitioning towards more stable and sustainable growth as private demand slows.
Yellen admitted that inflation is still high at present, but is expected to fall in the future, reiterating that reducing inflation is the government’s top priority.
In addition, Yellen also mentioned her concerns about the global economic outlook.
“I’m worried about the global outlook,” she said. “The International Monetary Fund keeps downgrading its economic outlook for this year and next, and a strong dollar is putting economic pressure on some of these countries, especially as dollar-denominated debt becomes more difficult to repay.”
However, she denied that high interest rates have driven global capital flows into the United States to have a negative feedback. Under such a negative cycle, capital outflows will depress the growth prospects of developing countries, leading to further capital flight.