When pressed by NBC host Chuck Todd over the weekend, Yellen said that “growth is slowing” — even though output appears to be turning negative for a sustained period of time. The remarks come ahead of the Bureau of Economic Analysis publishing an advanced estimate of second quarter Gross Domestic Product (GDP) growth later this week — a reading that is expected to show that the economy shrank at a 1.6% annualized pace from April to June.
Because the economy likewise contracted at a 1.5% rate in the first quarter, the United States may have experienced two consecutive quarters of negative growth — meeting the rule-of-thumb definition for a recession. Yellen — who admitted last month that she was “wrong” about the “path that inflation would take” — dismissed such claims.
“This is not an economy that’s in recession,” she told Todd. “But we’re in a period of transition in which growth is slowing and that’s necessary and appropriate and we need to be growing at a steady and sustainable pace. So there is a slowdown and businesses can see that and that’s appropriate, given that people now have jobs and we have a strong labor market.”
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