U.S. Treasury Secretary Janet Yellen says that the U.S. is unlikely to enter into a recession this year.
- Speaking with Bloomberg TV on Monday, Yellen discussed the state of the Chinese economy in the aftermath of a meeting of G20 financial officers.
- While China’s ongoing issues will likely affect American interests, Yellen argues that it will not likely affect the country’s chances of entering a recession.
- Yellen found the most recent inflation data encouraging and says that the country is making strong progress on inflation without harming the jobs market.
Why It’s News
The interview comes following the June jobs report coming in hot, inflation being at its lowest rate of increase in two years, and Wall Street anticipating a new Bull Market. New government data shows the GDP increased at a 2% annualized rate in the first quarter, up from previous projections of 1.3%. Economic growth has slowed, but core economic indicators have moved in the right direction.
Analysts continue to be split on the remainder of the year. Inflation remains higher than the Federal Reserve wishes it to be at 3%, and a subsequent interest rate hike is expected on July 26. The Deutsche Bank’s researchers argued last month that a U.S. recession is likely later this year, but many domestic analysts believe that a soft landing is a foregone conclusion at this point.
“Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia—and slow growth in China can have some negative spillovers for the United States,” says Yellen. “The labor market’s been so strong, it has encouraged more prime-age people to enter [the workforce]. Wage growth is moderating and inflation is subsiding … I don’t expect a recession.”