Yellen Says US Economy Is Not Seeing Recession Conditions Now

“We do see a significant slowdown in growth,” Yellen said at a press conference on Thursday. But a true recession is a “broad-based weakening of the economy,” she said. “That is not what we’re seeing right now.”

The country currently is seeing job creation, strong household finances, gains in consumer spending and growth in business, Yellen said. Employment climbed by 1.1 million jobs in the second quarter, a sharp contrast with the average loss of 240,000 in the first three months of past recessions, she said.

The Treasury chief was speaking hours after data showed the US economy shrank for a second straight quarter, as higher interest rates slowed business investment and housing demand.

“We need to see a slowdown,” Yellen said. “The labor market is extremely tight, and may be the source of some inflationary pressure,” she said, while emphasizing the important contributions of food and energy costs and supply-chain bottlenecks in driving up the cost of living.

Thursday’s data fired up the debate over whether the US had slipped into a recession. While two straight quarters of economic contraction fit a broad definition of a “technical” recession, the White House has pushed back against that determination, citing job growth and investments.

Bringing inflation down is a top priority for the administration, Yellen reiterated. Consumer-price gains are “likely to come down in the days ahead,” she also said.