US Secretary of the Treasury Janet Yellen on Thursday said she still expects that the US economy would avoid a recession, despite widespread forecasts by analysts and investors for another downturn.
As to “whether or not we can avoid a recession, I believe the answer is yes,” Yellen told reporters during a visit to Fort Worth, Texas.
She highlighted that US payrolls so far have avoided declines.
Photo: Reuters
The Treasury head added that she expects deeper engagement ahead with China, and is open to a trip to the country — though there is no specific plan for that at this point.
Most economists see the US falling into a recession next year, according to a Bloomberg survey last month.
That is after the steepest increases in the US Federal Reserve’s key interest rates since the early 1980s. However, job growth has remained solid in recent months, something that is inconsistent with broad economic slumps.
“Without seeing significant net nationwide layoffs, I believe we’re on the right track in terms of lowering inflation and a recession’s not inevitable,” Yellen said.
The secretary also flagged that, “as businesses tone down their expectations for growth and are slightly diminishing their hiring plans, quits have declined a little bit.”
“Supply-chain bottlenecks are clearly beginning to ease. That’s helpful” with respect to inflation, Yellen said.
The Treasury secretary was also asked about whether she might visit China.
This week, heads of global lenders, including the IMF and the World Bank, have been on their first in-person visit to China since the COVID-19 pandemic began.
“I have no definite plan to visit China, but I am certainly open to it and look forward to more intense interactions than we’ve had over the last year or two,” Yellen said.
A key issue for the Treasury, along with international lenders, has been encouraging China to be more generous in debt relief for developing nations, given that it is the biggest individual official lender.
Yellen said she had raised the debt issue with her Chinese counterpart, departing Vice Premier Liu He (劉鶴), and other officials, but had not seen much progress.
“I am hopeful that they will come to understand the necessity of relieving debt, restructuring debt when it’s unsustainable, and that could be a topic for future meetings,” she said.
Yellen added that China faces a “very complex problem” in adjusting its COVID-19 policies, which have caused growth to slow, but suggested that the use of Western-developed “mRNA” vaccines might help the situation.
A positive change in China’s COVID-19 situation could lead to a “pickup” in growth, she added.
Additional reporting by Reuters
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