"Strong Consumer and Investment Spending... Positive Performance of the US Economy"
Inflation Diagnosed as "Downward Trajectory"
U.S. Treasury Secretary Janet Yellen stated on the 25th (local time) that "the first-quarter growth rate may be revised higher, and inflation will ease to a more normal level" in relation to the slowdown in U.S. economic growth and the rise in inflation in the first quarter of this year.
In an interview with foreign media on the same day, Secretary Yellen said, "The U.S. economy continues to perform very well."
She explained, "What I pay the most attention to is the strength of consumer spending and investment spending," adding, "These two components of final demand matched last year's growth rate, which shows the fundamental strength of a sustained and robust U.S. economy."
According to the Commerce Department's announcement that day, the U.S. economic growth rate in the first quarter of this year slowed significantly more than expected, and inflation accelerated. The preliminary estimate of the U.S. first-quarter real gross domestic product (GDP) growth rate was 1.6% quarter-on-quarter (annualized), falling short of both the revised 4th quarter figure of last year (3.9%) and Bloomberg experts' forecast (2.5%). Meanwhile, the core Personal Consumption Expenditures (PCE) price index rose 3.7% in the first quarter, significantly exceeding the expected 3.4%.
Regarding this, Secretary Yellen assessed, "The fundamentals are consistent with inflation continuing to decline to normal levels." She added, "There is no reason for the unemployment rate to rise in order to lower inflation," and said, "The data show me that inflation is on a downward path."
She pointed out that, amid successive indicators showing the U.S. labor market remains strong, there is no basis to believe that strong employment will fuel inflation. The number of new unemployment claims for the week of April 14?20, announced that day, also recorded 207,000, the lowest level in two months.
Additionally, Secretary Yellen described China's overproduction problem as the biggest concern for the U.S. and its allies, stating, "Nothing (in terms of countermeasures) is off the table." She particularly noted that China has acknowledged the overproduction issue, which poses problems not only for the U.S. but also for Europe, Japan, as well as emerging countries like India and Mexico.
Secretary Yellen also said she is "prepared to use the authority to impose sanctions if necessary" against Chinese banks that assist trade transactions with Russia, thereby supporting Russia's war efforts. She revealed that measures to seize Russian government assets frozen in the U.S. and Europe are also under discussion.
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