US Secretary of the Treasury Janet Yellen said there are no “red lights flashing” for the financial system, and reiterated her view that the US economy has reached a soft landing even as job growth weakens.
“For the US, the kinds of metrics that we would monitor that would summarize risks — whether it’s asset valuations or a good degree of leverage — things look good, I don’t see red lights flashing,” Yellen said on Saturday at the Texas Tribune Festival.
“I’m attentive to downside risks” on employment, she said, adding that job growth is solid.
Photo: Bloomberg
The Treasury chief spoke a day after US equities capped the biggest weekly selloff since the regional banking crisis in March last year — roiled by a weaker-than-expected gain in payrolls that stoked concern that the US Federal Reserve would prove late to begin lowering interest rates.
The S&P 500 Index slid more than 4 percent last week.
“While there are risks, it really has been amazing to be able to get inflation down as meaningfully as we have” while maintaining strong growth, Yellen said. “This is what most people would call a soft landing.”
Yellen highlighted “wages going up at a decent clip,” surpassing the pace of inflation, along with the lack of any mass layoffs. Monthly job gains are at about the level needed to absorb new entrants to the labor market, she said.
Last month’s jobs release showed US hiring fell short of forecasts, with non-farm payrolls rising 142,000. The three-month average hit the lowest since mid-2020, but the unemployment rate edged down to 4.2 percent, Bureau of Labor Statistics data showed. That was the first decline in five months, reflecting a reversal in temporary layoffs.
Yellen also said she would welcome a visit to the US by Chinese Vice Premier He Lifeng (何立峰) and is open to another visit of her own to China, as she underscored the importance of the world’s two largest economies engaging with each other.
“I certainly may go back there — I would welcome a visit by my Chinese counterpart, and my guess is that we will have one way or another a visit,” she said.
Yellen met for hours with He during a visit to Beijing in April, continuing the re-engagement between the two nations that began in November last year with US President Joe Biden’s sit-down with Chinese President Xi Jinping (習近平).
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