President Biden and Treasury Secretary Janet L. Yellen on Thursday dismissed questions about whether the U.S. economy is already in recession, pointing to a strong labor market and other indicators as signs of health.
At a press conference at the Treasury Department, Yellen said she did not believe the U.S. was in recession and said the labor market and household balance sheets remained strong despite slowing growth. claimed.
Biden said at the White House that while the economy was slowing, “we are seeing signs of economic growth.” The president pointed to Wednesday’s comments by Fed Chairman Jerome H. Powell, who said he did not believe the United States was currently in a recession.
“The reason is that there are too many sectors that are doing too well,” Mr. Powell said.
The comment came at a time when disappointing economic data raised concerns that the economy could soon enter a recession. The Federal Reserve (Fed) raised rates sharply again on Wednesday in an attempt to keep inflation in check. This could further chill the economy.
Commerce Department data released on Thursday showed inflation-adjusted gross domestic product fell 0.2% in the second quarter, equivalent to an annualized decline of 0.9%.
The 0.2% decline follows a contraction of 0.4% in the first three months of the year. This, by a popular but informal definition, meant that the US economy entered a recession just two years after the last recession.
“In relation to today’s report, it’s important to look beyond the headline numbers to understand what’s going on,” Yellen said. “Overall, with private demand slowing, the report shows the economy moving towards more stable and sustainable growth.”
Yellen said recessions are usually characterized by high levels of unemployment and significant strain on household budgets. She argued that business and consumer spending and industrial output remained strong.
The Treasury secretary added that the global economy faces many risks that could affect the U.S. economic outlook, pointing to Russia’s war in Ukraine, lockdowns in China and supply chain disruptions. .
Yellen acknowledged that inflation is still too high and that keeping it in check is a top priority for the Biden administration.
“We haven’t seen anything like this since the 1970s. Seeing what’s happening to food prices, energy prices, rent and other prices in the economy, families are very worried about their finances. ” said Yellen.
She also expressed support for the proposed climate and tax law released by Senate Democrats Wednesday night, suggesting it would help moderate inflation. It aims to expand the tax credit for electric vehicles while increasing taxes on large corporations and strengthening tax law enforcement.
“These efforts are long overdue and Congress should pass them quickly,” Yellen said.