(WASHINGTON) – U.S. Treasury Secretary Janet Yellen said Sunday that U.S. economic growth is slowing and acknowledged there is a risk of a recession, but said it is not inevitable.
Yellen, speaking on NBC’s “Meet the Press,” said strong US hiring numbers and consumer spending showed the US economy is not currently in a recession.
US hiring remained strong in June, with 372,000 jobs added and the unemployment rate holding at 3.6%. It was the fourth consecutive month of employment growth above 350,000 positions.
“This is not an economy that is in a recession,” said Yellen, who previously chaired the Federal Reserve. “But we are in a transition period where growth is slowing and that is necessary and appropriate.”
Still, last week’s data suggested the labor market was weakening, with new claims for jobless benefits hitting their highest point in eight months.
Yellen said inflation “is too high” and that the Fed’s recent rate hikes were helping to curb rising prices.
In addition, the Biden administration is selling oil from the Strategic Reserve, which Yellen says has already helped push down gas prices.
“In the last few weeks, gas prices have dropped about 50 cents (per gallon) and more should be on the way,” he said.
Yellen hopes the central bank can cool the economy enough to drive prices down without triggering a broad economic downturn.
“I’m not saying we’re going to definitely avoid a recession,” Yellen said. “But I think there is a path that keeps the labor market strong and brings down inflation.”
US GDP shrank at a 1.6% annual rate in the first quarter, with Thursday’s report expected to show a gain of just 0.4% in the second quarter, according to economists polled by Reuters.
Yellen said that even if the second-quarter figure is negative, it would not be a sign that a recession has set in, given the strength of the labor market and strong demand.
“The recession is a generalized weakness in the economy. We’re not seeing that right now,” he said.
Economists have traditionally defined a recession as two consecutive quarters of economic contraction, but the private group considered the official arbiter of recessions in the United States examines a wide range of indicators.
