The recession many Americans fear is "absolutely inevitable," Treasury Secretary Janet Yellen said on Sunday.
Talk of a recession has accelerated this year like inflation remains high and the Federal Reserve is taking aggressive steps to fight it. On Wednesday, the Fed announced a 75 basis point rate hike, the highest since 1994. Fed Chair Jerome Powell also noted the intention of the Federal Open Market Committee to continue its aggressive stance of tightening monetary policy to curb inflation.
At the same time, many expect a combination of continued consumer spending and job growth to keep the United States out of recession.
"I expect the economy to slow down," Yellen said in an interview with ABC's This Week. "It's growing fast because the economy has recovered, as has the job market, and we've reached full employment. So it's natural to expect a transition to steady growth, but I don't think a recession is entirely inevitable.
Although Yellen appears optimistic about avoiding a recession, the global economy continues to face severe threats in the coming months with the ongoing war in Ukraine, rising inflation, and the Covid-19 pandemic. "It's clear that inflation is very high," Yellen said.
However, he doesn't think declining consumer spending will cause a recession. Yellen told ABC News that the US job market was strongest since the war and expected inflation to slow "in the coming months."
