Janet Yellen Optimistic About US Economy Amid Inflation Concerns and Calls for Consumer Spending Slowdown

She suggests that a slowdown in consumer spending might be necessary to combat inflation.

Janet Yellen, the Treasury Secretary of the United States, believes that the risk of a recession in the country is diminishing

Yellen made these comments in an interview with Bloomberg News, emphasizing the resilience of the labor market and the decreasing inflation rate as reasons for her optimism. However, she acknowledged that the Federal Reserve‘s tightening policy, which has included 10 interest rate hikes since March 2022, poses a potential risk. Yellen stated that a slowdown in spending is necessary to control inflation, as the core measure of price increases remains high. The recent consumer price index release showed that core inflation rose by 5.3% compared to the previous year.

Yellen expressed confidence in the decreasing inflation rate, attributing it in part to an expected adjustment in the housing market. She also addressed the debate about whether the Federal Reserve should raise its inflation target from the current 2% rate, stating that it is not the appropriate time for such discussions.

Yellen had the opportunity to interact with Chinese Premier Li Qiang

She noted that China has been more cooperative in providing debt relief for Zambia, which marks a positive step in international relations. Yellen suggested that China’s recent engagement in debt-relief efforts might be part of a broader initiative to improve its international image, as the country faces economic challenges such as a declining population and a high youth unemployment rate.

Janet Yellen’s assessment of the US economy reflects her confidence in its resilience, despite concerns about inflation and monetary tightening. Her interactions with Chinese officials indicate potential progress in international debt relief efforts and a desire by China to foster a positive climate for foreign investment.