Treasury Secretary Janet Yellen rejected recession fears in an interview with “Good Morning America” on Monday, saying the economy remains “strong and resilient.”
A blockbuster jobs report last week showed that the economy added 517,000 jobs in January, dropping the unemployment rate to a near-historic low.
“You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years,” Yellen said.
The remarks from Yellen came a day before President Joe Biden makes his State of the Union Address, when he will likely comment on the nation’s economic outlook amid ongoing inflation.
Four in 10 Americans say they’re worse off financially since Biden became president, according to an ABC News/Washington Post poll released on Sunday. The figure marks the highest share of discontented respondents since the outlets began conducting the poll 37 years ago.
When asked by ABC News’ George Stephanopoulos about persistent economic concern despite a strong jobs market, Yellen said, “The country has been through a lot.”
“With the COVID pandemic and all the stress that placed on the economy, and then Russia’s war in Ukraine that boosted food and energy prices, Americans are concerned about inflation and it’s been President Biden’s top priority to bring it down,” she added.
Consumer prices rose 6.5% over the yearlong period ending in December, which amounts to a significant slowdown from a summer peak but remains more than triple the Federal Reserve’s target of 2%.
Price hikes for some items stand well above the overall inflation rate. The price of eggs has risen 60% over the past year while the cost of flour has risen 23%, government data showed.
The Fed last week imposed the latest in an aggressive string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession.
Legislation enacted during the Biden administration, such as the $369 billion Inflation Reduction Act, has helped the central bank’s effort to slow price increases, Yellen said.
“While the Fed has primary responsibility here, legislation that has been passed in some cases on a bipartisan basis is strengthening our economy and lowering costs for Americans,” she said.
The Inflation Reduction Act will reduce the federal deficit by $238 billion over roughly the next decade, according to the nonpartisan Congressional Budget Office.
Speaking with “Good Morning America,” Yellen also weighed in on a possible dispute in Congress over raising the nation’s debt limit before it is set to exceed the threshold this summer.
Each year, the U.S. enacts a law that increases the amount of money that the federal government can borrow for past expenditures, ensuring that the nation continues paying creditors what it owes. Failure to reach an agreement would all but ensure a recession, experts previously told ABC News.
Some Republicans in the House have resisted an increase of the debt limit unless Democrats agree to spending cuts. The Biden administration, however, has repeatedly said that it will not negotiate over the debt ceiling.
“America has paid all of its bills on time since 1789, and not to do so would produce an economic and financial catastrophe,” Yellen said. “Every responsible member of Congress must agree to raise the debt ceiling.”
She added, “It’s something that simply can’t be negotiable.”