Treasury Secretary: Recession Risk ‘Not Completely off the Table'

Treasury Secretary Janet Yellen does not rule out the risk of a recession in the United States, saying that it is "appropriate and normal" for moderate growth and that inflation is still very high, according to Bloomberg.

Recession risks are "not completely off the table," Yellen said in a transcript of an interview with CBS. Speaking in Beijing after meeting top Chinese leaders, she said monthly job growth slowed as expected after remaining at a "high level".

“We have a healthy economy, a great job market, very high inflation, which is a concern for us and the American people, but it is going down over time,” Yellen said. "I hope, and I believe, that we are on a path to lower inflation in the context of a healthy labor market, and the data that I've seen suggests that we are on that path," she added.

US inflation is likely to continue to ease in June, but a leading indicator of underlying price pressures remains at an uncomfortable pace that has the Fed leaning towards a resumption of rate hikes this month.

A government report on Wednesday is expected to show that the CPI rose 3.1% from a year ago, the lowest annual rate since March 2021. However, once volatile energy and food costs are removed, core CPI is expected to rise 5%. on an annual basis. While this would be the smallest annual increase since late 2021, it is still more than double the Fed's target, based on the core inflation indicator.

Chicago Federal Reserve President Austan Goolsby said on Friday that policymakers are on the "golden path" of easing price growth without causing a recession in the world's largest economy, as data that day showed a slowdown in job growth meaning the money market remains unchanged. strong.

Non-farm payrolls increased by 209,000 last month - less than economists expected - and job gains over the past two months have been revised downward. The unemployment rate fell to 3.6%, while average hourly earnings increased by 4.4% from a year earlier.

Yellen was on a four-day visit to Beijing, where she described the talks with her Chinese counterparts as helping bring bilateral relations closer on "more secure footing."

Escalating tensions between the US and China have led to a tit-for-tat trade war and mounting restrictions on key technologies such as chips.

Yellen told CBS that while President Joe Biden's administration was considering additional controls on foreign investment, they would be "very narrowly targeted" and would not significantly affect bilateral investment with China.

It said it had raised in Beijing the issue of China's recent move to restrict exports of two minerals critical to the chip industry and reopened channels of communication that could be used to discuss concerns.