Janet Yellen says the U.S. is likely to avoid a recession
Treasury Secretary Janet Yellen said on Thursday that she expected the United States economy to slow as the Federal Reserve raised interest rates to tame inflation but that she did not anticipate a recession.
Speaking at The New York Times Dealbook D.C. policy forum, Yellen said that the global economy faced an array of serious threats and that gas prices were unlikely to fall in the near term. However, she said that the U.S. economy remains strong despite rising prices and that a solid labor market and robust household finances should be able to continue to propel consumer spending.
“There’s nothing to suggest a recession is in the works,” Yellen said.
Yellen has faced criticism this month after she acknowledged that she was wrong about the path that inflation would take in the past year, when she — along with many other economists — initially described price gains as “transitory.” The Treasury secretary has also faced questions about whether President Joe Biden’s $1.9 trillion stimulus package was responsible for fueling inflation.
Yellen said on Thursday that she did not regret the scale of the aid, known as the American Rescue Plan, given the dire economic predictions at the time of its passage in March 2021.
“I wouldn’t do it differently,” Yellen said, noting that forecasters were anticipating high unemployment for an extended period. “I was very supportive of the American Rescue Plan.”
Although Yellen expressed optimism that the U.S. would be able to avoid a recession, the economy faces some serious headwinds including the war in Ukraine, higher energy prices and the continuing COVID lockdowns in China.