President Biden and Treasury Secretary Janet L. Yellen on Thursday dismissed questions about whether the US economy is already in a recession, citing a strong labor market and other metrics as signs of its health.
Ms. Yellen, speaking at a Treasury news conference, said she did not believe the United States was in a recession, arguing that the labor market and household balance sheet remained strong despite slowing growth.
Mr. Biden, speaking at the White House, said that while the economy was slowing, “we’re seeing signs of economic progress as well.” The Chair referred to comments made on Wednesday by Jerome H. Powell, Chairman of the Federal Reserve, who said he does not believe the United States is currently in a recession.
“The reason is that there are a lot of areas of the economy that are doing very well,” Powell said.
The comments came as disappointing economic data raised fears that the economy may soon enter a recession, if it is not already there. The Federal Reserve made another big rate hike on Wednesday as it tries to tame inflation, which is likely to further calm the economy.
Commerce Department data released on Thursday showed that gross domestic product, after adjusting for inflation, fell 0.2 percent in the second quarter, equaling a 0.9 percent annual rate of decline.
The 0.2 percent decline followed a 0.4 percent contraction in the first three months of the year — meaning that by one common but unofficial definition, the US economy entered a recession just two years after emerging from the latter.
“In the context of today’s report, it is important to look beyond the address number to understand what is happening,” Ms Yellen said. “Overall, as private demand slows, this report points to an economy transitioning to more steady and sustainable growth.”
Ms Yellen said downturns are usually marked by significant job losses and family budgets being put under great pressure. She said business and consumer spending and industrial production remained strong.
The treasury secretary added that the global economy faces many risks that may affect the economic outlook for the United States, citing Russia’s war in Ukraine, lockdowns in China, and supply chain disruptions.
Ms. Yellen acknowledged that inflation is still too high and that taming it has been a top priority of the Biden administration.
“We have simply not seen anything like this since the 1970s, and seeing what is happening to food prices, energy prices, rents and other prices in the economy makes families very anxious about their family budgets,” Ms Yellen said.
She also voiced support for the proposed climate and tax legislation unveiled by Senate Democrats Wednesday night, noting it would help mitigate inflation. The bill aims to reduce the costs of prescription drugs and provide expanded tax credits for electric vehicles while increasing taxes for large corporations and intensifying tax law enforcement.
“These efforts are long overdue, and Congress should approve them immediately,” said Ms. Yellen.
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