A recession “just isn’t compatible with the kind of labor market we see,” the US Treasury Secretary said.
US Treasury Secretary Janet Yellen expressed optimism on Tuesday that the United States could avoid a recession in the coming months, due to the good health of the job market and consumption.
An economic slowdown seems inevitable, she stressed. By contrast, a recession “just isn’t compatible with the kind of labor market we’re seeing,” Joe Biden’s economy and finance minister said on NPR radio.
Inflation, which is at its highest in the country since 1981, threatens economic growth, however, because it reduces the purchasing power of households.
Especially since to slow it down, the American Central Bank (Fed) is raising its key rates, which has the effect of raising the cost of credit for businesses and individuals, in order to ease the pressure on prices. At the risk, however, of an economic slowdown.
“The Fed will want to achieve as a kind of soft landing. This is something that will require skill and luck. I hope it can be done,” said Janet Yellen.
“There are global risks, and these pose risks to our economy,” she further commented, such as the war in Ukraine or the economic slowdown in China.
Second-quarter US gross domestic product (GDP) growth will be released on July 28.
Janet Yellen also mentioned the global taxation of multinationals, which had been the subject of an agreement between 137 countries under the aegis of the Organization for Economic Co-operation and Development (OECD) in October 2021, and must now be adapted in the legislation of each country.
In the United States, it is a divided Congress that must decide.
“I would say that over time as other countries pass a minimum, it will spur our Congress to pass legislation,” the minister said.
Asked about the possibility that it will take several years to achieve this, Janet Yellen admitted that “it is possible, (but) I hope not. Hopefully we’ll be able to adopt this sooner and take a leadership role as more countries comply.”