Janet Yellen says she sees no signs of a recession despite two previous periods of negative growth

Really, Janet? Treasury secretary Yellen says she sees NO signs of a recession in US economy – despite two previous periods of negative growth, falling stock and housing markets and soaring inflation

  • Treasury Secretary Janet Yellen said she does not believe a recession is looming despite two first-quarter declines to open 2022
  • Gross domestic product (GDP) fell 1.6 percent in the first quarter before falling an additional 0.6 percent the following quarter
  • Yellen: ‘Inflation is very high – it’s unacceptably high and Americans feel that every day’
  • GDP rose by 2.6 percent in the third quarter – though economists say they ‘don’t expect this growth to continue this year or early next’

Treasury Secretary Janet Yellen says she does not believes a recession is looming, despite the country experiencing two first-quarter declines.

Real gross domestic product, a measure of all economic output in the country, increased by 2.6 percent in the third quarter despite a 1.6 decline in the first and a 0.6 percent drop in the second.

Amid inflation rates, rising living expenses and mortgage rates, some economists –  including Goldman Sachs CEO David Solomon and JP Morgan CEO Jamie Dimon – believe a recession is likely within the next year.

Yellen noted that while ‘inflation is very high – it’s unacceptably high and Americans feel that every day,’ the US economy is still strong.

‘If you look around the world, there are a lot of economies that are really suffering not only from high inflation but very weak economic performance, and the United States stands out,’ she said.

‘We have unemployment at a 50-year low … We saw in this morning’s report – consumer spending and investment spending continued to grow. We have solid household finances, business finances, banks that are well capitalized.

‘This is not an economy that’s in recession and we continue to do well.’ 

Treasury Secretary Janet Yellen does not believe a recession is looming - despite the country experiencing two first-quarter declines, inflation and rising living expenses

Treasury Secretary Janet Yellen does not believe a recession is looming – despite the country experiencing two first-quarter declines, inflation and rising living expenses

Gross domestic product, or GDP, fell by 1.6 percent in the first quarter before dipping 0.6 percent in the second. It then rose by 2.6 percent in the third

Gross domestic product, or GDP, fell by 1.6 percent in the first quarter before dipping 0.6 percent in the second. It then rose by 2.6 percent in the third

President Joe Biden was among the first to celebrate the economy’s recent growth.

‘For months, doomsayers have been arguing that the US economy is in a recession and Congressional Republicans have been rooting for a downturn,’ said Biden in a statement.

‘But today we got further evidence that our economic recovery is continuing to power forward,’ he added.

In his statement, Biden also took credit for falling gas prices, which have fallen from their June peaks of more than $5 per gallon, to a national average of $3.79 earlier this week.

‘Now, we need to make more progress on our top economic challenge: bringing down high prices for American families,’ Biden said.

However, economists have expressed fears that the economy is on shaky ground, and skepticism that the latest GDP report represents healthy growth.

‘If you take a step back and look at GDP, it’s gone effectively nowhere over the last year,’ Mark Zandi, chief economist at Moody’s Analytics, told NPR.

‘One quarter or two it’s down a bit. This quarter it’s up a bit. But net-net, we’re kind of treading water,’ he added.

Inflation remains near four-decade highs, and the Fed has been aggressively raising interest rates to rein in prices

Inflation remains near four-decade highs, and the Fed has been aggressively raising interest rates to rein in prices

To fight inflation, the US central bank has raised its benchmark overnight interest rate from near zero in March to the current range of 3 to 3.25 percent, the swiftest pace of tightening in a generation or more

To fight inflation, the US central bank has raised its benchmark overnight interest rate from near zero in March to the current range of 3 to 3.25 percent, the swiftest pace of tightening in a generation or more

Yellen believes the current administration has not received enough credit for its efforts to turn the economy around.

‘There were several problems that we could have had, and difficulties many families American families could have faced,’ she said. 

‘These are problems we don’t have, because of what the Biden administration has done. So, often one doesn’t get credit for problems that don’t exist.’

In addition to piling praise on the administration, Yellen said there were ‘real tangible investments happening right now,’ including a new $20 billion Intel plant outside of Columbus, Ohio.

The nation’s infrastructure is also continuing to grow, she added.

‘But you’re beginning to see repaired bridges come online – not in every community, but pretty soon,’ Yellen said.

‘Many communities are going to see roads improved, bridges repaired that have been falling apart. We’re seeing money flow into research and development, which is really an important source of long term strength to the American economy. 

‘And America’s strength is going to increase and we’re going to become a more competitive economy,’

Yellen believes the current administration has not received enough credit for its efforts to turn the economy around

Yellen believes the current administration has not received enough credit for its efforts to turn the economy around

The latest GDP report showed that stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the US economy.

Consumer spending, which accounts for about 70 percent of US economic activity, expanded at a 1.4 percent annual pace, down from a 2 percent rate from April through June. Last quarter’s growth also got a boost from exports, which shot up at an annual pace of 14.4 percent.

Housing investment, though, plunged at a 26 percent annual pace, hammered by surging mortgage rates as the Federal Reserve raises borrowing costs to combat chronic inflation.

The Fed has raised interest rates five times this year and is set to do so again next week and in December.

Fed Chair Jerome Powell has warned that the Fed’s hikes will bring ‘pain’ in the form of higher unemployment and possibly a recession.

 Overall inflation remains stubbornly high at 8.2 percent, and core inflation, which excludes volatile food and energy prices, hit a four-decade high of 6.6 percent in September.

Biden touts his ‘historic economic recovery’ and slams ‘doomsayers’

Biden issued the following statement following the preliminary GDP report showing the US economy grew 2.6 percent in the third quarter: 

‘For months, doomsayers have been arguing that the US economy is in a recession and Congressional Republicans have been rooting for a downturn. But today we got further evidence that our economic recovery is continuing to power forward. This is a testament to the resilience of the American people. As I have said before, it is never a good bet to bet against the American people. Our economy has created 10 million jobs, unemployment is at a 50 year low, and U.S. manufacturing is booming. Today’s data shows that in the third quarter, Americans’ incomes were up and price increases in the economy came down. 

‘Now, we need to make more progress on our top economic challenge: bringing down high prices for American families. Even with our historic economic recovery, gas prices are falling – down $1.26 since the summer, and down over the last three weeks. The most common price at gas stations in America today is $3.39 a gallon. That is progress, but we need to do more to bring other prices down as well. My Administration has passed laws that will bring down prescription drug prices and health insurance premiums starting next year. We must do more. 

‘Congressional Republicans have a very different agenda – one that would drive up inflation and add to the deficit by cutting taxes for the wealthiest Americans and large corporations. It would raise the cost of prescription drugs, health care, and energy for American families. That failed economic vision is not the way to give families more breathing room and grow our economy so working families can get ahead.’ 

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