A recession in the United States is not “inevitable”, says the secretary of the Treasury
US Treasury Secretary Janet Yellen said on Sunday that a recession was not “inevitable” in the United States, days after another hike in key rates by the US central bank raised fears of the prospect of an economic contraction. .
“I don’t think a recession is inevitable,” Yellen told ABC News, conceding, however, that she expects “the economy to slow down” as it transitions to “slow and slow growth.” steady “.
The hypothesis of a recession in the United States is gaining momentum after the historic decision on Wednesday by the central bank (Fed) to raise its key rates by three quarters of a point, in an attempt to curb galloping inflation.
“(Fed) Chairman Powell has said his goal is to reduce inflation while maintaining a strong job market. It’s going to take skill and luck, but I believe it’s possible,” the Treasury Secretary said, calling the level of inflation “unacceptable”.
“It’s President Biden’s priority to reduce it,” Yellen said.
The Treasury Secretary pointed to Russia’s war in Ukraine as one of the reasons for these food and fuel price hikes.
On Wednesday, Fed Chairman Jerome Powell assured that the institution was not trying to “induce a recession”, but to “reduce inflation to 2%”, and to maintain “a solid labor market”.
The Fed is now counting on 5.2% inflation this year, when it still anticipated 4.3% at its March meeting. At the same time, it forecasts growth of only 1.7%, against 2.8% previously.
– Reasons for hope –
The US economy has already slowed with a 1.5% contraction in GDP in the first quarter, and the start of the second quarter seems to show that the slowdown is continuing in certain sectors such as manufacturing, real estate and retail sales.
A survey by the Conference Board institute recently revealed that 76% of the 750 bosses questioned considered either that a recession was looming on the horizon, or that it was already effective.
Former Secretary of the Treasury between 1999 and 2001, Larry Summers, for his part, considers that the hypothesis of a recession in the American economy “by the end of next year” is the most “probable”.
“I think all the historical precedents point to a recession,” Bill Clinton’s former minister said on NBC on Sunday, pointing to the Fed’s target of 2% inflation.
But current Treasury Secretary Janet Yellen sees reason to hope that a recession does not materialize, especially with consumer spending remaining “very strong”, she said.
“It’s clear that most consumers — even lower-income households — continue to have savings that can act as a buffer and allow them to continue spending,” she told ABC News.
The minister further argued that the job market was also “very strong”, “probably the strongest” since the end of the Second World War.
Faced with the concerns of American households in the face of inflation, Janet Yellen considered that a temporary freeze on fuel taxes at the pump represents “an idea that is worth considering”.
Asked about the removal of customs surcharges imposed on Chinese products under Donald Trump, the Treasury Secretary said: “The surcharges that we inherited, some have no strategic purpose and increase costs for consumers. So we parameterize some of them to make more sense. »