Janet Yellen Says Q3 GDP Data Shows Economic Strength — But Also Signs of Healthy Slowdown

Benzinga Real-time News· 39 mins ago

2mins

SPDR S&P 500 ETF(SPY.US)

379.980377.460

-0.53%-0.66%Post

Vanguard Bd Index Fund Inc Total Bond Market Etf(BND.US)

70.71070.500

+0.53%-0.30%Post

U.S. Treasury Secretary Janet Yellen said on Thursday that new GDP data indicates strength in the U.S. economy but also some signs of a healthy slowdown which could have a positive impact on taming high inflation, reported Reuters.

Yellen was speaking to reporters on her trip to Cleveland to tout the Biden administration's economic policies.

On Recession: The Treasury Secretary said she still does not expect a recession, but the U.S. government possesses the fiscal capacity to respond to economic weakness, if appropriate, according to the report. The U.S. economy grew 2.6% in the third quarter after witnessing contractions earlier this year.

"This is certainly a full employment economy with a hot labor market, which is good, but we want to see growth slow."

- Yellen said adding that it's part of getting inflation under control.

Yellen's speech comes less than a week before the U.S. Federal Reserve is set to announce its monetary policy. Market participants have now factored in a less aggressive Federal Reserve, but seem to have retained a 75 basis points rate hike expectation. The $SPDR S&P 500 ETF(SPY.US)$ has gained 2.55% over the last one month, while the $Vanguard Bd Index Fund Inc Total Bond Market Etf(BND.US)$has shed over 1.61% in the same period.

"I have said many times I see a path to bringing inflation down while maintaining a strong labor market. And I think this data is consistent with what we would want to see."

- she said.

The Treasury Secretary also stated, "we need to be careful not to use fiscal policy to exacerbate an inflationary problem."

"But if there were — which I don't expect — but if there were a deep recession, that was something that called for a response, I think we continue to have enough fiscal space to do so."

- she said.

On Treasury Market: Yellen also said the Treasury was studying diminished liquidity in the U.S. Treasury debt market and said this was a function of broader market volatility. "We don't see problems," she noted.