Despite warnings from economists and experts, Treasury Secretary Janet Yellen says that a healthy market proves the economy is far from a recession.
The Treasury is scheduled to release reports on the current state of the U.S. economy, including consumer confidence, new homes, inflation, output, and incomes, Secretary Yellen told NBC's Meet the Press. However, Yellen emphasized the health of the economy, noting that consumer spending is increasing, and household balance sheets are more stable than in past years. She adds that the unemployment rate is at a half-century low at 3.5%.
While Yellen told Meet the Press that the economy's growth is slowing, it hit a historically rapid pace in 2021, and adjustments are "necessary and appropriate." The goal is for growth to continue at a steady and stable speed, she adds, and slowing down growth will help decrease currently record high inflation rates. She concludes that this is a transitional period, and as of right now, we still have a strong economy that is enduring despite inflation.
However, as the economy shrank 1.6% in the first quarter, many economists believe that a recession could be imminent. AP News reports that Yellen is "downplaying" the risk of a recession, and Bank of America's economists forecasted a mild recession to occur in the fourth quarter. Additionally, as the federal government hikes interest rates, this leads to higher borrowing costs, which impacts consumer spending and lowers borrowing by businesses—the perfect equation for a recession, says Larry Summers, the Treasury Secretary under President Bill Clinton.
"When inflation has been high, and unemployment has been low, soft landings represent a kind of triumph of hope over experience," Summers told CNN's GPS. "I think we're very unlikely to see one. I think there is a very high likelihood of a recession."