Odds of US recession fall, but consumer slowdown may be needed to finish inflation fight, US treasury secretary says

Shoppers outside a Nike store at Brickell City Centre in Miami, Florida, US, on June 14, 2023. US retail sales unexpectedly rose in May, showcasing resilient consumer demand in the face of mounting economic challenges.

US recession
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US Treasury Secretary Janet Yellen sees diminishing risk for the US to fall into recession, and suggested that a slowdown in consumer spending may be the price to pay for finishing the campaign to contain inflation.

On the chance of a recession, Yellen said “my odds of it, if anything, have gone down – because look at the resilience of the labour market, and inflation is coming down.” She spoke in an interview with Bloomberg News on Thursday.

“I’m not going to say it’s not a risk, because the Fed is tightening policy,” she said, alluding to the Federal Reserve’s 10 interest-rate hikes since March 2022, with potentially more to come.

Yellen’s latest assessment of the US economy follows a May employment report that showed job gains beating all economists’ forecasts. Home construction and retail sales for last month have also shown surprising resilience in the face of the Fed’s aggressive monetary tightening.

US Treasury Secretary Janet Yellen listens during the closing session of the New Global Financial Pact Summit on June 23, 2023 in Paris. Photo: AP

“We probably need to see some slowdown in spending in order to get inflation” under control, Yellen said in reference to consumption. The core measure of price increases, which strips out food and energy, “is quite high,” she said.

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Source: www.scmp.com
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