REHOBOTH BEACH (AP) – United States (US) Treasury Secretary Janet Yellen said on Sunday that she expects the US economy to slow in the months ahead, but that a recession is not inevitable.
Yellen offered a dose of optimism even as economists grow increasingly worried about a recession fuelled by skyrocketing inflation and the Russian invasion of Ukraine.
She also expressed an openness, during an interview on ABC’s This Week, to a federal gas tax holiday to help give motorists some relief at the pump. Several lawmakers have floated the idea as the average price of gasoline hovers around USD5 per gallon; the tax is 18.4 cents per gallon.
“That’s an idea that’s certainly worth considering,” Yellen said when asked if the administration is weighing it.
She added that President Joe Biden wants “to do anything he possibly can to help consumers.” And Energy Secretary Jennifer Granholm said “it’s one of the tools,” but told CNN’s State of the Union that “part of the challenge with the gas tax, of course, is that it funds the roads”.
Yellen said overall consumer spending in the US remains strong, while noting that spending patterns are changing, given the impact of rising food and energy prices. Yellen said household savings during the coronavirus pandemic will help sustain spending.
The national saving rate has fallen to about six per cent, below pre-pandemic levels, after reaching 16.6 per cent in 2020, the highest on record dating to 1948, and 12.7 per cent in 2021.
“I expect the economy to slow,” Yellen said. “It’s been growing at a very rapid rate and the economy has recovered and we have achieved full employment. We expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”