Yellen, looking through stock market weakness, says she doesn’t expect recession – MarketWatch

With the U.S. stock market slumping Friday, U.S. Treasury Secretary Janet Yellen went on television and said she didn’t expect a recession.

In back-to-back interviews on CNBC and Bloomberg, Yellen said the strong job market was a better indicator of the health of the economy.

“I don’t expect a recession,” she said.

She noted the International Monetary Fund expects the U.S. economy to grow at a 3.7% annual rate this year. This is very solid, Yellen said.

“We have a very strong labor market, household balance sheets are in good shape, and financial institutions are strong,” she noted.

There are risks to the outlook but Yellen said she’s expecting a “solid year” for the economy.

Asked about the “bumpy day” on Wall Street, Yellen said the stock market is not “a reflection of the underlying strength of the economy.”

“I think the U.S. economy has been remarkably resilient,” Yellen.

The labor market is doing “extremely well and that is the “strongest indication” of how the economy is doing.

Yellen said that inflation may have peaked, but quickly added that high inflation won’t disappear.

“The Fed is taking steps to bring inflation down, but I think we will have to put up with high inflation a little longer,” Yellen said.

The Treasury Secretary, who ran the Federal Reserve from 2014 to 2018, said the Fed Chairman Jerome Powell and his colleagues plan to raise interest rates to get inflation under control in a way that won’t cause the economy to crash.

Reaching such a “soft landing” will take some skill and luck, Yellen said, but it is important to get inflation under control.

The decline in stocks DJIA, -2.82% SPX, -2.77% gathered steam over much of morning trading.

The yield on the 10-year Treasury note TMUBMUSD10Y, 2.895% remained close to the highest levels of the year on expectations of Fed rate hikes.

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