Secretary of the Treasury Janet Yellen claimed she did not “see any signs the economy is at risk of a downturn” during a Monday interview on CNBC.
Yellen cited lower rates of inflation and a strong labor market in the interview. In August, the Bureau of Labor Statistics revised the number of jobs created from March 2022 to March 2023 down by 306,000.
“We still have a good healthy labor market, consumer spending remains quite robust,” Yellen told “Squawk on the Street” co-anchor Sara Eisen. “We’ve seen strong industrial production. I don’t see any signs that the economy is at risk of a downturn. And this is the best of all worlds, to see continued strength in the economy, a good strong labor market, and inflation moving down. And that is what we’re seeing.”
Unemployment increased to 3.8% in August, according to the Bureau of Labor Statistics, which also revised estimates for jobs created in June and July down by 110,000. About 60% of Americans live paycheck-to-paycheck, according to LendingClub.com.
“Credit continues to be available, although the rates are clearly higher. That does make a difference in it. It has — it has made a difference in some sectors,” Yellen said. “But you know, we’re seeing some cooling in the economy, some slowdown of growth off record high levels, which is appropriate when the economy is operating at its potential. So I’m pleased by what I see in the economy. I — I think we’re achieving lower inflation, which is, of course, very important to households and a tremendously important objective, but still a good strong labor market.”
Federal regulators shut down First Republic Bank on May 1 and sold it to J.P. Morgan Chase weeks after it received a $30 billion infusion from multiple lenders in order to stave off contagion following the sudden collapse of Silicon Valley Bank and Signature Bank in March.
Federal Reserve Chairman Jerome Powell said that inflation would be transitory during an August 2021 speech at Jackson Hole, Wyoming, then admitted in September 2021 that inflation ended up lasting longer than he “expected.”
President Joe Biden currently has a 37.4% approval rating on the economy, according to the RealClearPolitics average. Biden’s handling of inflation drew the approval of 32.8% of Americans, the average shows.
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