US Treasury Secretary: "Solid Economic Recovery Outlook... Inflation Concerns Amid Tariff Dispute with China"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Suhwan] Janet Yellen, U.S. Treasury Secretary, recently dismissed recession concerns spreading in the U.S. Treasury market, stating that a robust economic recovery is expected. She also emphasized the need to resolve the tariff dispute with China, noting that the dispute is a factor driving up consumer prices domestically and contributing to inflation.

In an interview with Bloomberg News on the 31st of last month (local time), when asked by a reporter whether she was worried about a recession amid the recent sharp volatility in government bond yields, Yellen responded, "I am not worried. What I see is a solid and strong (economic) recovery."

She added, "The recent unemployment rate is decreasing," and "This is a completely different pattern from the recovery process after the 2008 financial crisis."

Earlier, as the flattening of the yield curve?where short-term U.S. interest rates rose significantly compared to long-term rates?intensified, volatility in the government bond market increased, leading to analyses that recession concerns might be reflected in the market.

This yield curve flattening phenomenon is due to expectations that the Federal Reserve (Fed) will raise interest rates earlier than anticipated to curb inflation.

In the interview, Yellen said, "The Fed has its own framework for decision-making," and "They have clearly signaled that they will begin tapering (reducing asset purchases)."

She also agreed with Fed Chair Jerome Powell’s view that inflation will not be prolonged and emphasized the necessity of the economic stimulus measures being pursued by the Joe Biden administration.

Yellen stressed, "(The Biden administration’s large-scale social welfare budget) will show its effects in the long term," and "It contains various elements that promote economic growth."

While inflation is expected to subside in the short term and the U.S. economic recovery is anticipated, she underscored that large-scale federal government budget spending policies should be implemented concurrently.

Furthermore, Yellen highlighted concerns that the tariff dispute with China could act as a factor pressuring inflation and called for the removal of tariffs.

In another interview with foreign media, Yellen stated, "Easing tariffs on Chinese steel and aluminum would have an effect in alleviating inflation."

Meanwhile, regarding concerns that the early retirement trend after COVID-19 is exacerbating labor shortages, Yellen said, "Data shows that people are well-prepared to seek jobs," and "Some of the unemployed will eventually return to the labor market."

This content was produced with the assistance of AI translation services.