AP Photo/Evan Vucci
- The US isn't going to suffer a recession, Janet Yellen said Monday.
- "Growth has slowed, but our labor market continues to be quite strong," she told Bloomberg.
- But China’s economic slowdown does pose risks, the Treasury Secretary warned.
The US recession that some economists have been predicting for 18 months or longer might now not come after all, according to Janet Yellen.
The Treasury Secretary said Monday that the combination of a robust jobs market and cooling inflation means she's confident that the world's largest economy won't suffer a prolonged slump.
"Growth has slowed, but our labor market continues to be quite strong – I don't expect a recession," Yellen told Bloomberg TV while attending a meeting of the G-20 countries in India.
"The most recent inflation data were quite encouraging," she added, referring to the rate of US price rises falling from 4.0% in May to 3.0% in June.
Yellen's cheery outlook comes with economists increasingly hopeful that the US won't slip into a recession, despite inflation remaining high elsewhere and the Federal Reserve raising interest rates from near-zero to over 5% over the past 16 months.
Unemployment has stayed below 4% in the face of that aggressive tightening campaign – although GDP is estimated to have risen just 2% in the first quarter of the year, according to the Bureau of Economic Analysis.
Yellen's boss, US president Joe Biden, has also played down the chance of a contraction.
Forecasters have said a slump has "been coming for 11 months," he told donors at a Maryland fundraiser last month. "Well guess what? I don't think it is going to come."
But the Treasury Secretary did warn of one potential threat to both global and US growth: China.
The world's second-largest economy is battling below-par GDP, deflationary pressures, and soaring youth unemployment – and a slowdown there could weigh on the earnings of US-based companies like Apple and Nike, which derive huge profits from selling to Chinese customers.
"Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia," Yellen said. "Slow growth in China can have some negative spillovers for the United States."