Amid threats of a US recession, the country’s Treasury Secretary Janet Yellen has said that although the economy may slow in the coming months, “recession is not inevitable”.
His optimism is in stark contrast to economists’ fears of a recession due to rising inflation and the Russian invasion of Ukraine.
Ms Yellen said overall consumer spending in the US remains strong, noting that spending patterns are changing, given the impact of rising food and energy prices, an AP report quoted her as saying.
He said that household savings would help sustain spending during the coronavirus pandemic.
The AP reported that the national savings rate has fallen to nearly 6 percent from pre-pandemic levels, after reaching 16.6 percent in 2020, the highest on record dating to 1948 and 12.7 percent in 2021.
“I expect the economy to slow down,” Ms Yellen said. “It is growing very fast and the economy has recovered and we have achieved full employment. We look forward to the transition to steady and stable growth, but I don’t think a slowdown is inevitable at all.”
Ms Yellen echoed US President Joe Biden’s optimism in the face of economic obstacles.
Mr Biden insisted in an interview with the AP last week that a recession is not inevitable and made the case that the US is “in a stronger position than any country in the world to overcome this inflation.”
Last Wednesday, the Federal Reserve approved its biggest interest rate hike in more than a quarter-century to stave off a surge in inflation. The move raised the targeted federal funds rate from three-quarters of a percent to between 1.5 percent and 1.75 percent.
With monetary policy tightening as well as the Fed’s economic outlook declining, the economy now saw growth slow to 1.7 percent this year, with unemployment rising to 3.7 percent by the end of the year and continuing To increase to 4.1 percent by 2024.