In an interview with Reuters on Thursday, US Treasury Secretary Janet Yellen stated that despite a weaker-than-expected first-quarter GDP reading, the US economy is performing well and inflation is on track to reach a more normal level. Yellen’s comments were part of Reuters’ NEXT Newsmakers series, where she discussed the state of the economy with editor in chief Alessandra Galloni.
The Commerce Department reported earlier on Thursday that the US economy grew at an annualized rate of 1.6% during the first quarter, the slowest pace of growth since the economy contracted in the second quarter of 2022. Despite this, Yellen emphasized that the economy is still strong, with a robust job market, strong consumer spending, and historically strong economic growth in the face of inflation and geopolitical tensions.
Inflation in the US had slowed down last year, but recent price increases, particularly in gas and services, have stalled that progress. Federal Reserve officials have been cautious about the process of bringing down inflation, and the first-quarter readings give them reason to continue monitoring the situation before making any adjustments to interest rates.
Internationally, geopolitical tensions have escalated with ongoing conflicts in Ukraine and the Middle East, as well as challenges in the US-China relationship. President Joe Biden recently called on the US Trade Representative to review Chinese tariffs and potentially increase rates. The outcome of this review is expected soon, and potential actions could be taken to enhance the effectiveness of tariffs.
Overall, while the US economy faces challenges, it continues to perform well according to Yellen. The Federal Reserve will be meeting next week to discuss policy moves, with expectations to hold interest rates steady. The situation remains dynamic, and further updates on economic developments are expected.