Kevin Mahn, president and chief investment officer of Hennion & Walsh Asset Management, notes that the yield curve remains inverted, which has occurred before every recession in the country dating back to 1955.
Treasury Secretary Janet Yellen acknowledged on Sunday that the United States is experiencing an economic “slowdown” but downplayed the potential for a recession, arguing that the country is in a period of “transition” after a rapid economic growth.
“The economy is slowing down,” Yellen said on NBC News’ “Meet the Press,” adding that a correction is “appropriate” for a healthy economy.
“The job market is very strong right now,” he said. “This is not an economy that is in recession, but we are in a transition period where growth is slowing down. And that is necessary and appropriate, and we need to be growing at a steady and sustainable rate. So there’s a slowdown, and businesses can see that and that’s appropriate, given that people are now employed and we have a strong labor market.”
“But you don’t see any of the signs now: a recession is a broad-based contraction that affects many sectors of the economy. We just don’t have that,” he added. “I would say we’re seeing a slowdown.”
Treasury Secretary Janet Yellen testifies before the House Ways and Means Committee on Capitol Hill in Washington, June 8, 2022. (AP Photo/Jose Luis Magana, File/AP Newsroom)
Yellen went on to say that a “common definition” of a recession is two consecutive quarters of negative GDP, and while economists expect to see negative growth again this quarter after registering -1.4% in the quarter past, that still wouldn’t mean the US is in a recession.
SINCE THE BIDEN ADMIN CALLED INFLATION ‘PASSING’, THE US HAS SEEN 13 STRAIGHT MONTHS OF RISING COSTS
“Even if that number is negative, we’re not in a recession right now and we shouldn’t characterize it as a recession,” he said.
US Treasury Secretary Janet Yellen (C) listens to President Joe Biden during a hybrid meeting with business CEOs and members of his cabinet to discuss the looming federal debt limit in the South Court Auditorium at the Eisenhower Executive (Chip Somodevilla/Getty Images/Getty Images)
NBC anchor Chuck Todd pushed back, saying the secretary was “splitting hair” over the definition.
“I mean, if the technical definition is two-quarter contraction, you’re saying it’s not a recession,” Todd said.
“That’s not the technical definition,” Yellen argued. “There’s an organization called the National Bureau of Economic Research that looks at a wide range of data to decide whether or not there’s a recession, and most of the data they’re looking at right now is still strong. I’d be surprised if the NBER I would declare this period a recession, even if it has two quarters of negative growth. We have a very strong labor market. When you’re creating almost 400,000 jobs a month, that’s not a recession.”
Yellen’s comments come as former Obama economic adviser Larry Summers told CNN on Sunday that “there is a very high probability of a recession” and it is “very unlikely” that the United States will have a “soft landing.” Last month, Summers warned that a recession is “almost inevitable, probably a 75%, 80% chance in the next two years, and there’s certainly a real risk of it coming sooner.”
President Joe R. Biden speaks with Treasury Secretary Dr. Janet Yellen during a Cabinet meeting in the Cabinet Room. (Sarah Silbiger for The Washington Post via Getty Images/Getty Images)
The United States has seen 13 straight months of rising inflation since the Biden administration, including Yellen, dismissed concerns about rising costs and said contributing factors were “transitory.”
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Yellen admitted in May of this year that she “was wrong then about the path inflation would take.”
Inflation rose to 9.1% in June, marking the fastest rate of inflation since December 1981.