Biden Treasury Secretary Says Economy Is ‘Resilient’ despite Negative GDP Growth

Although the U.S. has now posted two back-to-back quarters of negative economic growth, Treasury Secretary Janet Yellen believes the economy “remains resilient” and is not in a recession.

When asked this week whether six consecutive months of economic contraction warranted the “recession” label, Yellen argued that the shrinking GDP numbers don’t tell the whole story.

“That is not what we’re seeing right now when you look at the economy,” Yellen told reporters. “Job creation is continuing, household finances remain strong, consumers are spending and businesses are growing.”

On Thursday, the Bureau of Economic Analysis released their quarterly report on the state of the U.S. economy, which revealed that the country’s GDP shrank 0.9% during the second quarter of 2022. The decline followed a similar 1.6% decrease in the first quarter of the year.

While economists have long defined a recession as two consecutive quarters of negative economic growth, in recent days a number of Biden administration officials have sought to dispute that definition and avoid the political fallout from overseeing a shrinkin economy.

Despite Yellen’s insistence that “our economy remains resilient,” the Treasury secretary did acknowledge the “unacceptably high” levels of inflation that are hurting Americans’ finances.

“I think that the discomfort that households feel, it’s not because of the labor market,” Yellen said. “Some may worry that the … labor market will weaken, but I think the biggest burden that’s weighing on household sentiment is inflation.”

In June, inflation soared to 9.1%, marking the highest recorded levels since 1981.

Yellen also argued that the economic downturn seen during the first half of 2022 was an “appropriate” slowdown that the economy “needs.” The Treasury secretary claimed the decline in GDP simply marked a “transition” point.

“This report indicates an economy that is transitioning towards more stable, sustainable growth,” Yellen said. “Clearly we are seeing a slowing in the economy and in demand that’s appropriate if necessary to transition from rapid growth to recovery … We need to see a slowdown and we are seeing that.”

Yellen’s comments echoed the statement issued on Thursday by President Joe Biden, who said it was “no surprise that the economy is slowing down.”