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Recession in US ‘not inevitable’: Yellen

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US Treasury Secretary Janet Yellen and Treasurer Marilynn Malerba hold notes with their signatures at the Bureau of Engraving and Printing Western Currency Facility on December 8, 2022 in Fort Worth, Texas./AFP
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Dec 09, 2022 - 02:37 AM

Fort Worth, United States — A recession in the US is “not inevitable,” Treasury Secretary Janet Yellen said Thursday, adding that she believes the world’s biggest economy is on the right track in lowering inflation.

Her comments come on the heels of a forceful campaign by the US central bank to cool demand this year, walking a tightrope between lowering consumer costs while trying not to tip the economy into a downturn.

For now, many economists expect the US could experience a downturn next year.

On “whether or not we can avoid a recession, I believe the answer is yes,” she told reporters during a visit to the Bureau of Engraving and Printing’s currency facility in Fort Worth, Texas.

Supply chain bottlenecks are starting to ease and new apartment rents have “essentially peaked,” with the labor market cooling slightly as well, Yellen said.

“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,” she added.

As businesses tone down their growth expectations and hiring plans, the number of people leaving their jobs has also dipped a little, she said.

Last week, Federal Reserve Chair Jerome Powell added it remains “very plausible” for the US to reach a soft landing, referring to a scenario where unemployment rises but the economy avoids a severe recession.

On Thursday, Yellen said that the United States has been “listening very carefully” to allies and trying to understand their concerns on Washington’s push to spur climate-friendly technologies in America.

“I think the objective that Congress had was to make sure we have supply chains that are secure, and to try to include our allies in them,” she said.

Asked if she had plans to visit China following President Joe Biden’s meeting with his Chinese counterpart Xi Jinping, Yellen said she had no definite plans yet but was “certainly open to it.”

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