United States: Treasury Secretary warns of “risk of recession”

Janet Yellen, US Treasury Secretary, warned of a “risk” of recession in the United States due to measures taken to slow inflation.

Towards a slowing economy. US Treasury Secretary Janet Yellen warned on Sunday of the “risk” of a recession that could affect the United States.

This recession would be due to the measures taken by the government to slow down inflation which had reached its highest level in June in 40 years, before slowing down a little in July (8.5%).

The confident government

Faced with this risk, Janet Yellen still trusts the job market, which remains “solid”.

Nevertheless, she assured that it was “essential to reduce inflation”.

The Fed (US central bank) hopes for a “soft landing”, i.e. bringing inflation back to its target of 2%, without plunging the economy into recession, which would cause a surge in unemployment .

While the world’s largest economy’s GDP contracted in the first two quarters of 2022, fitting the classic definition of a recession, she again asserted that was not the case.

The job market remains very tense with a significant shortage of labour. The unemployment rate, however, rose a little in August, to 3.7%, in particular as the participation rate rose, a sign that many workers left on the side of the road because of Covid, are returning to the market.

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