Treasury Secretary Janet Yellen has not ruled out the possibility of a recession in the United States following the latest jobs report, which showed a slowdown in the labor market. In an interview with CBS News’s Face the Nation, Yellen stated that a recession is not completely off the table.
Yellen acknowledged that while the job market remains strong, ongoing job gains are expected to slow down. She cited the high level of prime age labor force participation, which has attracted workers back to the job market, but noted that this level is stabilizing and job gains may start to normalize.
The June jobs report revealed that the unemployment rate fell to 3.6 percent, with the economy adding 209,000 jobs. While this marks the fewest jobs added since December 2020, it is important to note that the jobless rate has decreased from 3.7 percent in May.
The Federal Reserve has implemented aggressive interest rate hikes in an effort to control high inflation and mitigate the risk of a recession. The latest job report numbers could indicate that more rate hikes are on the horizon.
Yellen highlighted the Biden administration’s economic policies and vaccination efforts, which led to a rapid rebound in the U.S. economy after the COVID-19 pandemic. However, she stated that growth has now slowed back to more normal levels.
The Treasury secretary emphasized the high-functioning labor market and the unemployment rate, which is close to its lowest level in the past 50 years. Yellen believes it is appropriate for growth to moderate, considering these factors. She also expressed concerns about high inflation but expressed hope that there is a path to bring inflation down within the context of a healthy labor market.
Yellen’s comments highlight the delicate balancing act facing policymakers. While the strong job market and low unemployment rate are positive indicators, concerns about inflation and the potential for an economic slowdown continue to loom. As the Federal Reserve grapples with these challenges, it’s important to monitor how the economy evolves and whether additional measures are needed.
Ultimately, the path forward remains uncertain, and it is crucial to consider multiple perspectives and opinions regarding the state of the U.S. economy. The key will be finding a balance that ensures continued growth while addressing inflationary pressures and avoiding a potential recession.
