United States: the risk of a recession is worrying, but the economy is solid, assures the White House

ÉUnited States: the risk of a recession is concerning, but the economy is solid, assures the White House

MISE & Agrave; DAY

WASHINGTON | The White House is concerned about the risk of a recession in the United States, but it believes that the fundamentals of the economy remain strong to deal with it, according to an economic adviser to President Joe Biden. 

“It's obviously a concern, but the backbone of our economy remains strong,” Cecilia Rouse told CNBC on Tuesday.

Ms. Rouse returned to the contraction of Gross Domestic Product recorded in the first quarter, insisting that this was caused by weak exports.

“If you look at the major components of GDP last quarter, they were actually pretty strong in terms of consumer spending,” she commented. “The labor market remains strong,” she continued.

And she says growth is continuing.

“Today, the economic data still looks relatively healthy,” added Thomas Barkin, chairman of the Richmond regional branch of the central bank (Fed), during a speech in Richmond, Virginia.

He acknowledged, however, that the data ahead was “of course uncertain”.

“A recession would of course be undesirable, but not all recessions are created equal,” he continued. “We've been haunted by our memories of the Great Recession and the Volcker recession (in 1981-82, named after the former Fed chairman, editor's note), but it's worth remembering that most other recessions don't are neither as long nor as deep.”

Tom Barkin also called for putting the current situation into perspective, stressing that the imbalance between supply and demand was the result of the recovery after the pandemic.

According to him, the return to normal will not necessarily pass by a recession, even if the risk is very present.

“I don't think a recession is inevitable,” Treasury Secretary Janet Yellen said on ABC News on Sunday, conceding however s expect “the economy to slow down” as part of a transition to “slow and stable growth”.

Yet the assumption of a recession on the near horizon in the United States United States is gaining momentum, after the historic decision of the central bank (Fed) to raise its key rates sharply, in an attempt to curb runaway inflation.

“We now expect a mild recession in the coming months, with persistent inflation forcing a more pronounced tightening of monetary policy,” said ain if Gregory Daco, chief economist at EY-Parthenon, in a note published on Tuesday.