"Chinese Counterpart's Visit to the US Will Be Welcomed"
Possibility of Additional Talks with Chinese Side Indicated Following April Meeting
As the U.S. August employment data came in weaker than expected, raising concerns about a recession, U.S. Treasury Secretary Janet Yellen stated that the U.S. economy is experiencing a soft landing and there are no warning signs in the financial system.
In an interview with Bloomberg News on the 7th (local time), Secretary Yellen said, "The risk indicators we look at, such as asset valuations and leverage levels, appear to be fine," adding, "There are no red lights flashing."
She said, "There are risks, but it is truly remarkable that we have been able to significantly reduce inflation while maintaining strong growth," and evaluated this as what most people call a soft landing.
She went on to say that wages are rising at an appropriate pace faster than inflation without mass unemployment, and that the monthly employment growth is at a level necessary to absorb new entrants into the labor market.
However, while employment growth and consumption remain solid, she said, "We are paying close attention to downside risks on the employment front."
According to the U.S. Labor Department's announcement the previous day, nonfarm payrolls in August increased by 142,000 compared to the previous month, falling short of the market expectation of about 160,000. The unemployment rate matched market expectations at 4.2%, but the July employment increase was sharply revised down from the initially reported 114,000 to 89,000.
As recession concerns grew, the U.S. stock market's Standard & Poor's (S&P) 500 index fell 1.7% that day, and the weekly decline rate (4.2%) was the largest since the collapse of Silicon Valley Bank (SVB) in March last year.
Regarding threats to the financial system, Secretary Yellen said, "There is much less regulation on the financial system outside of banks, and that is where the risks lie," citing cybersecurity risks among others.
On the fiscal soundness of the United States, she expressed concern that tax revenues have decreased due to tax cuts during former President Donald Trump's administration, and that fiscal sustainability may be at risk due to population aging and the expansion of social security programs.
Meanwhile, amid ongoing economic and industrial conflicts between the U.S. and China, Secretary Yellen emphasized the importance of economic engagement between the two countries, saying, "I can certainly go back to China, and I would welcome Chinese counterparts visiting the U.S."
Secretary Yellen visited China in April and met with Vice Premier He Lifeng. This remark is seen as suggesting the possibility of additional talks between the economic heads of both sides during the Biden administration.
She identified climate change and debt relief for developing countries as areas requiring engagement with China, and said it is important to maintain contact with counterparties in the event of future international financial crises.
Regarding the U.S. government's move to block Nippon Steel's acquisition of US Steel on national security grounds, Secretary Yellen declined to comment on the government's review status.
In a foreign media interview, when asked about the possibility of continuing to hold senior positions including Treasury Secretary in the new administration after President Biden's term ends in January next year, Yellen said, "I will probably step down, but we will see."
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