US Treasury Secretary Janet Yellen downplays recession fears | Latest English News | WION

US Treasury Secretary Janet Yellen on Sunday downplayed fears of a possible recession Sunday but admitted an economic slowdown is occurring.

In the united states where amid looming fears of an economic slowdown u.s treasury secretary janet yellen is downplaying the possibility of a recession in the united states yellen says growing consumer spending industrial output credit quality and other economic indicators do not suggest that the economy is recessionary but she added that america’s inflation is

Way too high and straining the country’s economic system yellen made the comments in a tv interview days before the u.s is due to release a trove of economic numbers that may fuel the notion that the country is in fact entering a recession the data will detail factors including new home sales consumer confidence plus incomes spending inflation and overall output

Data ahead of the thursday release some economists expect the us economy to demonstrate further contraction and if the numbers indeed show a second consecutive quarter of negative growth well that is the informal definition of a recession the us economy shrank by 1.6 percent in the first quarter of this year two straight negative readings are usually considered

A hallmark of a country entering recession although in this case some economists and the biden white house think the numbers may be misleading yellen highlighted america’s unemployment figures in her comment in her comments unemployment stands at 3.6 percent that’s nearly a half century low she said the u.s remains a very strong labor market but she acknowledged

That the american economy is in a transitional period in which growth is slowing she said the slowdown is necessary and appropriate if the economy is to grow at a steady and sustainable pace slower growth could help bring down inflation america’s june inflation numbers stood at 9.1 percent year on year that’s the highest in four decades for more on all of this

We’re being joined by economic advisor and strategy consultant uh jamie martinez and he is in the spanish capital of madrid mr martinez uh thanks very much indeed for joining us uh today i mean there’s going to be a bit of an argument here in the united states this week isn’t there if indeed uh a second consecutive quarter of negative growth is notched up uh because

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Under normal traditional circumstances uh investors and economists would recognize that as the start of a recession yes good morning thank you very much for having me here exactly although we are facing a context with high uncertainty economic data and expectations that there is a very high likelihood of recession for the united states economy in the second quarter

Of this year let’s remember that the u.s gdp has a downturn of 1.5 percent in the first quarter then if there is another downturn in the second quarter we can talk of a technical recession right and this scenario is a consequence of the new monetary policy addressed by the federal reserve in order to face the the high inflation which now is nine point percent in

The united states the highest in four decades and indeed after more one decade of expansive monetary policies with the main instruments of zero or interest or negative interest rates and the famous quantitative easings programs to maintain accredited panic to the system the inflation has finally arisen with a strength during the last year that is why the federal

Reserve after months of inaction now now is answering with a very restrictive monetary policy from april till now interest rates in the united states have increased from 0.5 percent to current 175 percent and with expectations of further increases in the coming quarters so so mr martinez you seem to be embracing the argument uh that has been advanced today in the

Wall street journal uh by senator elizabeth warren of massachusetts who says the fed’s aggressive interest rate hikes risk triggering a recession but there are voices here in the united states who say well hang on a second i mean it was treasury secretary janet yellen and president biden who waved away concerns about an inflationary spiral uh when uh they uh were

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Voiced by people like former treasury secretary larry summers and there are many voices here who say well the fed is now left dealing with a mess that essentially the biden administration created by flushing so much public money uh into public spending projects through america’s economic system yes i totally agree with that diagnosis actually we always economists

Know that inflation is always a monetary phenomenon and in this case as usual this high inflation is has been caused by one decade of a very expensive monetary policy which led to higher public spending by the government of course in the united states but also in europe and in other countries of the world and for me this is the main origin of the high inflation

Always low monitor a very low interest rates policy and high public spending and for that i’m not surprised about janet challen’s comments as i mean she was a she’s the former federal reserve president and she knows very well this phenomenon of inflation and she knows that the federal reserve must act now with strength maybe this recession will not bring a higher

Unemployment rate as other recessions have produced in the recent history but maybe this is because of another effect that we should consider we can mention the great resignation phenomena during the last year with the pandemic and that is why i don’t think it’s that it is very responsible try in trying to hide or make up the recession because of course recession

Is going to happen very probably in the united states in this year and this is going to have a high impact worldwide not only in europe but also in india because we must remember that the united states is one of the greatest consumers worldwide in the global demand so so at the end of the day are you saying it actually doesn’t matter what this is labeled i mean

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The real issue is to treat the problems that are besetting uh the american economy rather than have the debate about whether it is or is not recessionary yes i think um far from trying to affect which is the now the classic definition of recession the great problem now here is inflation inflation is the worst problem now and we have to face it not only in the

United states it’s a global phenomenon now which by the way it isn’t it’s not it’s not caused by by the war of ukraine many economists have been arguing that but of course we know in the united states for example inflation began significant to rise during the last year in march of the year 2021 so that’s why we cannot um say this is a consequence of the war in

Ukraine is again a consequence of these expansive monetary policies and the higher of of the public spending by the by all governments in the world so that’s why i think the main challenge now is to act against inflation the federal reserve has been late answering to this problem as well here in europe with the european central bank which now finally last last

Week the european central bank announced a rise in the entrance in the interest rates so that’s why i think all the main central banks although they have been acting very late now they must respond with uh more strength so that’s what we can expect expect now uh a recession during maybe in the last of this year or in the in the new year but in the whole world

Challenges the world over jamie martinez economic advisor and strategic consultant joining us today from madrid in spain thank you very much indeed uh for your insights on that

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US Treasury Secretary Janet Yellen downplays recession fears | Latest English News | WION By WION