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U.S. recession is not ‘inevitable,’ however inflation is ‘unacceptably excessive,’ Treasury Secretary Yellen says

U.S. Treasury Secretary Janet Yellen testifies earlier than a Home Methods and Means Committee listening to on President Biden’s proposed 2023 U.S. funds, on Capitol Hill in Washington, June 8, 2022.

Jonathan Ernst | Reuters

The recession that many Individuals worry is coming shouldn’t be “in any respect imminent,” Treasury Secretary Janet Yellen mentioned Sunday.

Discuss of a recession has accelerated this yr as inflation stays excessive and the Federal Reserve takes aggressive steps to counter it. On Wednesday, the Fed introduced a 75 foundation level rate of interest hike, its largest since 1994. Fed Chair Jerome Powell additionally indicated the Federal Open Market Committee’s intent to proceed its aggressive path of financial coverage tightening as a way to rein in inflation.

On the identical time, many count on the mixture of resilience in shopper spending and job progress to maintain the U.S. out of recession.

“I count on the financial system to gradual,” Yellen mentioned in an interview with ABC’s “This Week.” “It has been rising at a really fast charge, because the financial system, because the labor market, has recovered and we’ve reached full employment. It is pure now that we count on a transition to regular and steady progress, however I do not assume a recession is in any respect inevitable.”

Though Yellen appeared optimistic about avoiding recession, the worldwide financial system continues to be going through critical threats within the coming months with the continued struggle in Ukraine, hovering inflation and the Covid-19 pandemic. “Clearly, inflation is unacceptably excessive,” Yellen mentioned.

Nonetheless, she does not consider a drop-off in shopper spending can be the reason for a recession. Yellen advised ABC Information that the U.S. labor market is the strongest of the post-war interval and predicted that inflation would gradual “within the months forward.”

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