Janet Yellen does not expect a recession in the USA, Europe “more vulnerable”

The Secretary of State for the US Treasury relies on “a great momentum of economic recovery” in the United States, with in particular an “extremely low unemployment rate”.

US Treasury Secretary Janet Yellen said on Wednesday that she does not expect a recession in the United States, despite soaring energy prices and the war in Ukraine, judging that Europe is “more vulnerable “.

“I really don’t expect the United States to fall into recession,” she said at a press conference preceding a meeting of G7 finance ministers in Germany.

“I think Europe is maybe a bit more vulnerable and more exposed on the energy front than the United States,” she added.

Admittedly, “the current environment is fraught with risk, both in terms of inflation and potential (economic) downturns,” Yellen said.

But “we currently have a great momentum of economic recovery”, with in particular an “extremely low unemployment rate”, she tempered.

The US economy has experienced a strong economic recovery from the coronavirus pandemic, thanks in particular to extensive federal government stimulus packages.

But in recent months, inflation and disruptions to global supply chains, caused in particular by the war in Ukraine and the coronavirus pandemic in China, have dampened this momentum.

The country thus experienced a 1.4% drop in gross domestic product in the first quarter of 2022.

But the American leaders ensure that they do not expect a technical recession, that is to say two quarters in a row in decline.

At the end of April, Joe Biden thus affirmed not to be “worried” about a risk of recession, highlighting consumer spending by households and businesses.

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On the other side of the Atlantic, the fears are greater, the growth of the European Union depending heavily on the energy provided by Russia, which the 27 are trying, as best they can, to do without.

In Germany, Europe’s largest economy, a halt in Russian gas deliveries would cause GDP to fall by a total of 6.5% over the years 2022 and 2023, according to a study published by the main economic institutes in mid-April.

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