If there’s not an unanticipated shock, the United States will see much lower inflation by the end of 2023, Treasury Secretary Janet Yellen predicted on Sunday, noting, however, that there’s also a continued risk of a recession.
During the interview that aired Sunday on CBS’ “60 Minutes,” Yellen expressed her hopes that the labor market in the US will remain quite healthy so Americans can feel better about their personal economic situation and their finances.
She, however, stressed that although the country currently has a healthy banking system, business, and household sector, there is a risk of an economic recession which she’s doing everything in her power to avoid.
Yellen’s remarks come in light of last week’s release of the Producer Price Index – which measures the costs of products before they hit shelves- that for the 12 months that ended in November, was up 7.4% but was the lowest reading since May 2021.
Core PPI – which excludes food and energy – rose 0.4% in November whereas food prices increased by 3.3%.
Another key inflation measure, the Consumer Price Index, is due out on Tuesday.
Noting the very rapid recovery from the COVID-19 pandemic followed by very high economic growth, Yellen said that the economic growth in the United States is now slowing substantially since people got back to work following the surge in hiring and the labor market is healthy so everybody who wants a job has a job.
In the ongoing effort to fight inflation, the Federal Reserve Chair Jerome Powell also announced last month that, although at a slower rate, the central bank will continue to raise interest rates higher than officials previously thought.
Since March this year, the Federal Reserve has raised rates 6 times, in four of which the increase was by a historically large 0.75 percentage point.
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