Yellen warns recession risk remains possible.

Treasury Secretary Janet Yellen: Recession Not Imminent, but Caution Remains

Treasury Secretary Janet Yellen expressed optimism about the state of the economy while acknowledging the possibility of a future downturn. In an interview on CBS’ Face the Nation, Yellen discussed the recent job market report and the overall health of the labor market.

“We would expect, with the job market as strong as it is now, to see a slower pace of ongoing job gains,” Yellen stated. “But as that stabilizes at a high level, we should expect the monthly job gains to be coming down toward a more normal level.”

Yellen highlighted the remarkable rebound the country has experienced following the devastating impact of the pandemic. She emphasized the current strength of the labor market and the need for inflation control.

“Now growth has slowed somewhat back to more normal levels because we’ve put Americans back to work; we have a labor market that is functioning at a very high level,” Yellen explained. “So, it’s appropriate and normal that growth should moderate, but we have a healthy economy, a great labor market, inflation too high, and a concern of ours and the American people, but coming down over time, and it’s my hope that, and belief, that there is a path to bring inflation down in the context of a healthy labor market and the data that I’ve seen suggests we’re on that path.”

Acting United States Labor Secretary Julie Su also weighed in on the topic, refraining from making predictions about a potential recession. Su highlighted the Biden administration’s focus on investing in American industries and workers to stimulate economic growth.

“Investing in America, including industries like semiconductor infrastructure, manufacturing, clean energy,” Su stated. “Also investing in American workers and also increasing competition to decrease prices.”

Yellen’s recent visit to China aimed to strengthen economic relations between the two countries. During high-level meetings, she emphasized the importance of fair competition and the need to protect national security while maintaining a positive bilateral economic and financial relationship.

“We seek healthy economic competition that is not winner-take-all but that, with a fair set of rules, can benefit both countries over time,” Yellen conveyed to Chinese Premier Li Qiang. “The United States will, in certain circumstances, need to pursue targeted actions to protect its national security. And we may disagree in these instances. However, we should not allow any disagreement to lead to misunderstandings that unnecessarily worsen our bilateral economic and financial relationship.”

Yellen’s visit coincided with the Biden administration’s restrictions on American-Chinese trade, including limitations on the sale of chip-making technology. The U.S. will soon require government approval for cloud-service providers, such as Microsoft and Amazon, before providing Chinese companies with cloud-computing services that utilize advanced artificial intelligence chips. In response, China announced restrictions on the export of certain metals used in semiconductor chip production.

While Yellen remains cautiously optimistic about the economy, she acknowledges the need for vigilance and strategic actions to ensure continued growth and stability.

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