Treasury Secretary Janet Yellen said Sunday that a recession is not "inevitable" as the White House and Federal Reserve take aggressive steps to curb record inflation. File Pool Photo by Tom Williams/UPI | License Photo
June 19 (UPI) -- Treasury Secretary Janet Yellen on Sunday said that a recession is not "inevitable" as the Biden administration makes efforts to tackle record inflation.
Appearing on ABC News' This Week, Yellen noted that President Joe Biden has made bringing down inflation his "top priority" while Federal Reserve Chair Jerome Powell has also set out to lower inflation "while maintaining a strong labor market."
"That's going to take skill and luck, but, I believe it's possible," Yellen said." I don't think a recession is inevitable."
The Labor Department's most recent Consumer Price Index showed that inflation, already at 40-year highs, rose to an annual rate of 8.6% in May.
Powell and the Fed on Wednesday ordered a .75% interest rate hike, the highest since 1994 -- just before the U.S. economy boomed for the remainder of the 1990s -- as he attempted to steer the economy to a so-called "soft landing" by lowering inflation without triggering a recession.
Yellen on Sunday said she did "expect the economy to slow," while maintaining that a recession can still be avoided.
"It's been growing at a very rapid rate ... as the labor market has recovered and we have reached full employment," she said. "It's natural now that we expect a transition to steady and stable growth, but I don' think a recession is at all inevitable."
When pressed on how likely it was that a recession could still occur, Yellen cited data showing "consumer spending remains very strong" despite higher food and energy prices.
"Bank balances are high," she said. "It's clear that most consumers, even lower-income households, continue to have buffer stocks of savings that will enable them to maintain spending. So I don't see a drop-off in consumer spending as a likely cause of the recession in the months ahead. And the labor market is very strong, arguably the strongest of the post-war period."
With the price of gasoline nearing an average of $5 per gallon nationally, Yellen said that a federal gas tax was "an idea that's certainly worth considering" while adding that Biden wants "to do anything he possibly can to help consumers."
Yellen also noted Biden's "historic" release of an extra 1 million barrels of oil per day from the nation's strategic petroleum reserve in March as well as his comments that oil companies have profited amid the rising prices, which oil companies countered was the result of Biden's policies that have placed reliance on foreign oil.
"I don't think that the policies are responsible for what's happening in the oil market," she said. "I think that producers were partly caught unaware of the strength of the recovery in the economy and weren't ready to meet the needs of the economy. High prices should induce them to increase supplies over time."
Further, Yellen noted that high prices for gas and other fuel have been largely impacted by Russia's invasion of Ukraine and have affected nations throughout the world.
"It's important to recognize that the United States is certainly not the only advanced economy suffering from high inflation," she said. "We see it in the U.K., we see it in France, Germany, Italy and the causes of it are global, not local."