US economic growth and wage improvements should serve as a source of resilience in the future, according to Treasury Secretary Janet Yellen’s remarks.
“I continue to believe that there is a path to continue decreasing inflation while maintaining a healthy labor market,” Yellen said in a speech scheduled for next week in Nevada.
“While there are risks, the evidence we’ve seen thus far suggests that we are on such a path,” she noted.
The world’s largest economy bucked fears of a slowdown, increasing its speed in the second quarter of the year, boosted by business investment and consumer spending. Its labor market has been strong as well.
The strength comes despite officials’ efforts to cool demand and rein in inflation, fueling hopes that the central bank’s aggressive campaign of interest rate hikes will reduce price increases without causing a big recession.
Yellen stated in her prepared remarks that annual inflation is currently about six percentage points lower than its peak of 9.1 percent in June 2022, yet the economy continues to develop.
She also stated that real average hourly earnings had increased in the last year, correcting some pay inequality that has formed in recent decades.
“I expect the significant gains we’ve gained over the last two and a half years will serve as a source of resilience in the weeks and months ahead, even if our economy cools more,” Yellen said.
Consumer inflation rose for the first time in over a year in July, putting extra pressure on the central bank as officials consider further interest rate hikes.
