US Treasury Secretary Janet Yellen does not expect the US economy to fall into recession, although it could be negatively affected by unexpectedly slow economic growth in China. Inflation in the US is on the wane, according to the Secretary, while the labour market remains in good shape. Yellen said this in an interview with Bloomberg television today. The United States is the world’s largest economy, with China in second place.
Dependence on China
“A number of countries, particularly in Asia, are dependent on strong economic growth in China,” Yellen said hours after the release of data on China’s economy that fell short of analysts’ expectations. “Slow growth in China may have some negative implications for the United States,” she added.
Yellen acknowledged that U.S. economic growth has slowed, but she said the U.S. labor market remains quite strong. “I don’t expect a recession,” the secretary said. She added that the US economy is on track to reduce inflation without a significant weakening of the labour market. She described the latest US inflation data as “quite encouraging”
The US Labor Department reported last week that annual consumer price inflation in the US slowed to three per cent in June from four per cent in May. This marks the twelfth consecutive month that inflation has fallen and is at its lowest level since March 2021. Last June, inflation in the US climbed to 9.1 per cent, its highest level in about four decades.
US gross domestic product (GDP) increased by two per cent in the first quarter, slowing from 2.6 per cent in the previous three months. Preliminary data on GDP growth in the second quarter will be released by the US government next week.
China’s statistics bureau said today that China’s economic growth accelerated to 6.3 percent in the second quarter from 4.5 percent in the first quarter. But it fell well short of analysts’ expectations, who had estimated it at 7.3 percent on average.