Janet Yellen responds to Cardi B: 'There's nothing to suggest that a recession is in the works'
- Yellen responded to Cardi B's tweet asking about a potential recession announcement.
- "Consumer spending is very strong, investment spending is solid," she said.
Treasury Secretary Janet Yellen took some time on Thursday afternoon to address the recession fears of one of hip-hop's biggest stars.
At the New York Times Dealbook conference in Washington DC, Yellen responded to Cardi B's tweet last weekend that asked: "When y'all think they going to announce that we going into a recession?"
When asked about her familiarity with Cardi B, Yellen initially responded in jest: "I don't have that much time for her, but I am alive."
—DealBook (@dealbook) June 9, 2022
The treasury secretary listed various factors that reflect the US economy's relative strength during a stretch of record inflation. "Consumer spending is very strong, investment spending is solid," she said.
"We have a very strong economy," Yellen said. "I know people are very upset and rightly so about inflation, but there's nothing to suggest that a recession is in the works."
Cardi's worries aren't unique. A growing number of economists and business leaders have sounded the alarm on an impending downturn in recent months. Their argument goes like this: Inflation is so high that the Federal Reserve will have to aggressively raise interest rates, making it more expensive for consumers and businesses to borrow. That effort will cool off demand, slow the economy to a halt, and, according to bearish experts, spark a recession.
Data out Friday morning further stoked their concerns. Inflation unexpectedly accelerated in May to a year-over-year pace of 8.6%, the fastest rate since 1981. That surpassed economists' forecasts and signaled the price-growth problem may be harder to solve than initially expected.
If the US does slide into a recession, it likely won't happen soon. The economy continued to add jobs at an extraordinary rate through May, and low jobless claims hint companies are still firmly focused on hiring and retaining workers. The unemployment rate remains historically low. Household finances are generally healthy.
The economy has its fair share of challenges, but the recovery is still running too strong for the US to currently be in a recession.
"Americans are rightly angry about inflation. A strong labor market is not enough reason to celebrate. But, we are coming out of, not going into the hurricane," Claudia Sahm, a former Fed economist, said in a Tuesday blog post.
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