U.S. Treasury Secretary Janet Yellen during an armchair discussion at the Rotman School of Management in Toronto, Ontario, Canada on Monday, June 20, 2022.
Cole Burston | Bloomberg | beautiful pictures
Minister of the Treasury Janet Yellen said on Tuesday that the US economy is “doing very well” as rising energy prices, Covid-19 variants and Russia’s war with Ukraine have rattled global markets.
“From the US perspective, I think the US is doing very well,” Yellen told CNBC’s Sara Eisen on Tuesday. The Treasury Secretary will meet with world financial leaders at the International Monetary Fund and World Bank annual meetings this week in Washington, DC.
She said the economy is expected to slow down after a very strong recovery, but recently work report released last week revealed a “very resilient” economy. The Bureau of Labor Statistics reported on Friday that Nonfarm payrolls increased by 263,000 in Septemberwhile the unemployment rate fell to 3.5%, the lowest level since late 1969.
However, consumers have been somewhat constrained by prices rising near the fastest pace in more than 40 years. Latest New York Fed survey on consumer expectations showed that consumers expect an inflation rate one year from now of 5.4%, the lowest figure in a year and down from 5.75% in August.
That level peaked at 6.8% in June and has been falling ever since, as the central bank delivered a series of rate hikes totaling 3 percentage points. Markets largely expect the Fed to keep raising rates until it brings inflation down to its long-term target of 2%.
Yellen acknowledged that inflation is too high and that lowering it is a priority for the Biden administration. But she said there is a way to do it while maintaining a healthy labor market.
“Companies, even as interest rates rise, still have large and manageable debt burdens,” Yellen said. She added that US financial markets continue to perform well and that the Treasury Department does not see signs of debt write-offs that often occur in a tighter monetary policy environment.
Yellen also said OPEC + decide Oil production declines and Russia’s continued war against Ukraine have also affected market liquidity, but there is no sign of concern. Worrying about the strength of the US dollar is also a natural result of different rates of monetary tightening in the US and other countries, she said.
“The dollar is a safe haven, so when times are uncertain, we experience capital outflows into our safe market,” Yellen said. “And all of that is pushing the dollar up in many countries.”
– by CNBC Jeff Cox contributed to this report.
