The US economy has “turned out stronger” than expected despite recession forecasts, US Treasury Secretary Janet Yellen said during a speech in New Orleans on Friday.
“I continue to believe there is a way to reduce inflation while maintaining a strong labor market. Without underestimating future risks, the evidence we have so far suggests we are on that path,” added Janet Yellen.
Indeed, the data published in recent days have exceeded expectations, with a final estimate of GDP growth for the first quarter of 2%, well above the first estimate that anticipated only 1.1%, and inflation now the lowest in 18 months, with 3.8% over a year, according to the PCE index favored by the Federal Reserve (Fed).
But business leaders are “showing increasing signs of confidence” in the strength of the US economy, he added, “even if some sectors are slowing, the pace of household spending remains strong and businesses continue to invest.” A trend that should continue, also estimated Janet Yellen, who judges that the “solidity of the labor market and the persistence of business and household spending should keep our economy afloat, even if it slows down as inflation decreases.”
Will the recession be avoided?
The strength of the US economic indicators has a number of analysts now wondering if a recession, considered to some extent inevitable, will occur. Initially forecast for early 2023, the risk of a weak recession is now seen in the second half of the year, even if the Federal Reserve stressed that it would try to bring inflation to its 2% target while avoiding recession.
But Fed Chairman Jerome Powell has repeatedly said that getting inflation back to calm waters is the main goal, even if it does some economic damage. “The eventual cost of a strong policy against inflation will always be less than the cost that high inflation will have for our economy if we do not act,” Jerome Powell repeated this Wednesday during a round table in Sinta (Portugal).
During her speech, the Treasury secretary also praised the economic successes of the policy followed by President Biden, whose team tries to focus the campaign for his re-election in 2024, precisely on the political effects of his economic reforms, dubbed “Bidenomics.” .
Source: BFM TV
