Yellen Says Economy is in a ‘New Phase’
Treasury Secretary Janet Yellen said the U.S. economy has entered a “new phase” amid concerns that we have entered a recession.
During a press conference Thursday, Yellen echoed Biden’s statements that the U.S. has entered a new phase in its economic recovery focused on achieving “steady sustainable growth” without sacrificing the gains of the last 18 months.
She said growth is slowing globally, inflation remains unexpectedly high, and it “remains this administration’s top priority to bring it down.”
“We are in an important moment for our economy that presents an opportunity for us all to take stock,” she said during a press conference Thursday.
After the pandemic, Yellen said the U.S. experienced a “historic” economic recovery driven by the Biden administration’s policies, including the American Rescue Plan and the COVID-19 vaccine rollout.
She said the economy remains “resilient” in the face of global challenges.
The newly-announced Inflation Reduction bill will help ease inflationary pressures, lower healthcare, prescription drug and energy costs while reducing the national deficit, Yellen said.
“These efforts are long overdue, Congress should pass immediately,” she said.
Despite the recent GDP report, Yellen said the U.S. is not in a recession.
She said most economists and most Americans have a similar definition of recession; “substantial job losses and mass layoffs, businesses shutting down, private sector activities slowing considerably and family budgets under immense strain.”
“In sum, a broad-based weakening of our economy,” she said. “That is not what we are seeing right now.”
Yellen cited job creation, strong household finances, growing businesses and continued consumer spending.
“In the context of today’s [GDP] report, it is important to look beyond the headline number to understand what’s happened,” she said, adding that contraction in GDP is driven primarily by change in private inventories, a volatile component of GDP that subtracted two percentage points off quarterly growth.
“Overall, with a slowdown in private demand, this report indicated an economy transitioning that is to more steady, sustainable growth,” she said. “This path is consistent with one that eases inflationary pressures while maintaining the labor market progress of the last 18 months.”
Yellen said the Treasury Department will keeping a watch on the war in Ukraine, COVID-19 lockdowns in China and pandemic-related supply chain issues.
“These factors make predicting future difficult and must be clear-eyed and vigilant about threats they pose,” she said.
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