Topline
A recession is “not completely off the table” even as the U.S. economy remains strong, Treasury Secretary Janet Yellen said in an interview Sunday on CBS, after the June jobs report released earlier this week showed the U.S. economy adding fewer jobs than in previous months—a trend Yellen described as “normal” after years of rapid growth.
Treasury Secretary Janet Yellen said a U.S. recession is still possible during an interview on CBS.
Key Facts
In an interview on CBS News’ Face the Nation, Yellen described the job market as strong but said “we would expect … to see a slower pace of ongoing job gains,” after just over 200,000 jobs were added in June—a slowdown from previous months.
While Yellen commended that more workers have returned to the job market and the unemployment rate has fallen precipitously, she forewarned that monthly job gains will slow to “a more normal level” and said it’s “appropriate and normal” to have more moderate economic growth.
The treasury secretary said inflation remains “too high” but noted that it has begun to ease, after prices rose 4% year-over-year as of May—the lowest inflation number in more than two years, but still double the Federal Reserve’s 2% target.
Big Number
3.6%. That was the unemployment rate in June, according to data released Friday.
Crucial Quote
“Inflation [is] too high, an a concern of ours and the American people, but coming down over time, and it’s my hope that, and belief, that there is a path to bring inflation down in the context of a health labor market and the data that I’ve seen suggests we’re on that path,” Yellen said on CBS.
Key Background
The U.S. economy added 209,000 jobs last month, data released from the Labor Department on Friday showed. The unemployment rate decreased slightly from 3.7% in May to 3.6% in June. While the numbers were promising, there were also short of estimates and the least number of jobs added in a month since December 2020. In May, the U.S. economy added 339,000 jobs. For months, the Federal Reserve has attempted to ease inflation by hiking interest rates to their highest level in decades, slowing economic growth and prompting fears of recession. As a result, many economists and policymakers are hoping to see job growth ease to a more sustainable level, allowing inflation to fall without forcing the Fed to increase rates dramatically or plunging the country into a recession. The central bank chose not to raise interest rates further last month, but has indicated more rate hikes this year are likely, and said Wednesday a recession in 2023 is “quite likely” but probably won’t be “deep” or “prolonged.”
Tangent
At the end of June—after lawmakers agreed to raise the debt ceiling and avert the risk of the country defaulting on its loans—Yellen downgraded the risk of a recession saying “my odds of it, if anything, have gone down,” in an interview with Bloomberg.
Further Reading
U.S. Added Less Than Expected 209,000 Jobs Last Month As Labor Market Cools—Slightly (Forbes)
