White House, Others Disagree Over US Recession

Janet made the comment while speaking on ABC News ‘This Week‘ on Sunday. Despite rising concerns from different quarters, Yellen pointed out that the economic growth will slow but it will not lead to a recession.

“It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable,” Yellen added.

Rising Inflation Is a Global Phenomenon

Yellen noted that the inflation was unacceptably high. She also reiterated the administration’s commitment to bringing it down. Further, Yellen stated it was possible to control inflation while maintaining low unemployment rates.

The Fed hiked interest rates by 75 basis points to slow the rate of inflation. According to data from the Commerce Department, consumer prices were up by 6.3 percent in April. Consequently, there is an increase in the price of gas, consumer goods, and housing, with the working class and lower-middle-class suffering the brunt.

Many have heaped blame on the Biden administration for responding too late. However, on Thursday, Biden pointed out to the Associated Press that inflation was a global phenomenon. He also asserted that the US was better positioned to deal with it than many nations.

Yellen also towed the same line during her interview with ABC News. She noted that the war in Ukraine and supply chain issues due to Covid restrictions are the major causes of the rising inflation.

Recession Is Coming

Meanwhile, former Treasury Secretary Larry Summers has noted that it is likely that the United States will enter into a recession by the end of 2023.

A recent survey of economists by the Wall Street Journal projects a 44% chance of a recession occurring within the next 12 months. Compared to a 28% chance in April and 18% in January, more people believe a recession is coming.

“The dominant probability would be that by the end of next year, we would be seeing a recession in the American economy,” Summers said.

Polls from Gallup also show a general drop in economic confidence in the Biden administration. With the midterm elections to hold in November, the economic pessimism may not bode well for Biden and the Democratic party.

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