US economy in slowdown, not recession: Janet Yellen

The alarm bells of an impending recession haven’t been louder in 60 years. But Treasury Secretary Janet Yellen insisted Sunday that the transitioning US economy is only experiencing a “slowdown.”

“This is not an economy that’s in recession, but we’re in a period of transition in which growth is slowing,” Yellen said, adding that the labor market is “extremely strong.”

Strong job market
Hiring continues to remain robust. American employers added an impressive 372,000 jobs in June, keeping the unemployment rate steady at 3.6% for a fourth straight month.

And with the job market intact, consumers are still spending their hearts out.

It will ensure the Federal Reserve Board, aiming to cool inflation, raises interest rates by another 0.75 percentage points on Wednesday. 

GDP shrinking
But the US GDP shrank at a 1.6% annual rate in the first quarter, and the second quarter report due Thursday isn’t expected to show much of a gain.

Two consecutive quarters of contracting GDP point toward a recession. 

Yellen challenged this. “A recession is a broad-based contraction that affects many sectors of the economy. We just don't have that,” she said.