Janet Yellen says she sees no signs of a recession despite two previous periods of negative growth

Treasury Secretary Janet Yellen says she does not believes a recession is looming, despite the country experiencing two first-quarter declines.

Real gross domestic product, a measure of all economic output in the country, increased by 2.6 percent in the third quarter despite a 1.6 decline in the first and a 0.6 percent drop in the second.

Amid inflation rates, rising living expenses and mortgage rates, some economists –  including Goldman Sachs CEO David Solomon and JP Morgan CEO Jamie Dimon – believe a recession is likely within the next year.

Yellen noted that while ‘inflation is very high – it’s unacceptably high and Americans feel that every day,’ the US economy is still strong.

‘If you look around the world, there are a lot of economies that are really suffering not only from high inflation but very weak economic performance, and the United States stands out,’ she said.

‘We have unemployment at a 50-year low … We saw in this morning’s report – consumer spending and investment spending continued to grow. We have solid household finances, business finances, banks that are well capitalized.

‘This is not an economy that’s in recession and we continue to do well.’ 

Treasury Secretary Janet Yellen does not believe a recession is looming – despite the country experiencing two first-quarter declines, inflation and rising living expenses

Gross domestic product, or GDP, fell by 1.6 percent in the first quarter before dipping 0.6 percent in the second. It then rose by 2.6 percent in the third

President Joe Biden was among the first to celebrate the economy’s recent growth.

‘For months, doomsayers have been arguing that the US economy is in a recession and Congressional Republicans have been rooting for a downturn,’ said Biden in a statement.

‘But today we got further evidence that our economic recovery is continuing to power forward,’ he added.

In his statement, Biden also took credit for falling gas prices, which have fallen from their June peaks of more than $5 per gallon, to a national average of $3.79 earlier this week.

‘Now, we need to make more progress on our top economic challenge: bringing down high prices for American families,’ Biden said.

However, economists have expressed fears that the economy is on shaky ground, and skepticism that the latest GDP report represents healthy growth.

‘If you take a step back and look at GDP, it’s gone effectively nowhere over the last year,’ Mark Zandi, chief economist at Moody’s Analytics, told NPR.

‘One quarter or two it’s down a bit. This quarter it’s up a bit. But net-net, we’re kind of treading water,’ he added.

Inflation remains near four-decade highs, and the Fed has been aggressively raising interest rates to rein in prices

To fight inflation, the US central bank has raised its benchmark overnight interest rate from near zero in March to the current range of 3 to 3.25 percent, the swiftest pace of tightening in a generation or more

Yellen believes the current administration has not received enough credit for its efforts to turn the economy around.

‘There were several problems that we could have had, and difficulties many families American families could have faced,’ she said. 

‘These are problems we don’t have, because of what the Biden administration has done. So, often one doesn’t get credit for problems that don’t exist.’

In addition to piling praise on the administration, Yellen said there were ‘real tangible investments happening right now,’ including a new $20 billion Intel plant outside of Columbus, Ohio.

The nation’s infrastructure is also continuing to grow, she added.

‘But you’re beginning to see repaired bridges come online – not in every community, but pretty soon,’ Yellen said.

‘Many communities are going to see roads improved, bridges repaired that have been falling apart. We’re seeing money flow into research and development, which is really an important source of long term strength to the American economy. 

‘And America’s strength is going to increase and we’re going to become a more competitive economy,’

Yellen believes the current administration has not received enough credit for its efforts to turn the economy around

The latest GDP report showed that stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the US economy.

Consumer spending, which accounts for about 70 percent of US economic activity, expanded at a 1.4 percent annual pace, down from a 2 percent rate from April through June. Last quarter’s growth also got a boost from exports, which shot up at an annual pace of 14.4 percent.

Housing investment, though, plunged at a 26 percent annual pace, hammered by surging mortgage rates as the Federal Reserve raises borrowing costs to combat chronic inflation.

The Fed has raised interest rates five times this year and is set to do so again next week and in December.

Fed Chair Jerome Powell has warned that the Fed’s hikes will bring ‘pain’ in the form of higher unemployment and possibly a recession.

 Overall inflation remains stubbornly high at 8.2 percent, and core inflation, which excludes volatile food and energy prices, hit a four-decade high of 6.6 percent in September.