US Treasury Secretary Janet Yellen expressed optimism on Tuesday that the United States could avoid a recession in the coming months, due to the health of the labor market and consumption. An economic slowdown seems inevitable, she stressed. On the other hand, a recessionis simply not compatible with the type of labor market we see“said Joe Biden’s Minister of Economy and Finance on NPR radio.
Inflation, the highest in the country since 1981
Inflation, which is at its highest in the country since 1981, threatens economic growth, however, because it reduces the purchasing power of households. Especially since to slow it down, the American Central Bank (Fed) is raising its key rates, which has the effect of raising the cost of credit for businesses and individuals, in order to ease the pressure on prices. At the risk, however, of an economic slowdown.
“The Fed will want to perform as a sort of soft landing. This is something that will require skill and luck. I hope it’s doable“said Janet Yellen. “There are global risks, and these pose risks to our economy“, she further commented, like the war in Ukraine or the economic slowdown in China. Second-quarter US gross domestic product (GDP) growth will be released on July 28.
Janet Yellen also mentioned the global taxation of multinationals, which had been the subject of an agreement between 137 countries under the aegis of the Organization for Economic Co-operation and Development (OECD) in October 2021, and must now be adapted in the legislation of each country.
A divided Congress that must decide
In the United States, it is a divided Congress that must decide. “I would say that over time, as other countries pass a minimum, it will spur our Congress to pass legislation“, underlined the minister.
Asked about the possibility that it will take several years to achieve this, Janet Yellen admitted that “It’s possible, (but) I hope not. Hopefully we’ll be able to adopt this sooner and play a leadership role as more countries comply.“.
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