In response to the Commerce Department’s weaker-than-expected initial estimate for U.S. gross domestic product from January through March, Yellen emphasized that the U.S. economy is still performing very well. The GDP growth rate was less than half the pace in the fourth quarter of the previous year, mainly due to drags from trade and private inventories.
The report also showed a concerning increase in inflation, with the personal consumption expenditures price index excluding food and energy rising at a 3.7% annual rate. This was a significant jump from the 2.0% pace in the fourth quarter of 2023. Despite this, Yellen downplayed the inflation surge and did not believe it indicated a need to increase unemployment or cool other areas of the economy to return inflation to the Fed’s 2% target.
Yellen’s comments reflect a sense of optimism about the overall strength of the U.S. economy, despite some concerning indicators in the recent report. She believes that the current performance is solid enough to withstand challenges like inflation increases and does not see a need for drastic action to address these issues.