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Treasury Secretary Janet Yellen said on Thursday that a semantics debate over whether or not the U.S. economy is in a recession should be avoided as households grapple with inflation and high gas prices.
Why it matters: In recent days, Biden administration officials have gone to great lengths to stress that the nation has not entered a recession — an argument complicated by back-to-back quarters of negative growth, a common (but unofficial) rule of thumb for a recession.
- But the debate may be moot for everyday Americans pinched by decades-high inflation, who might not care either way whether it's officially a recession or not.
What she's saying: "We should avoid a semantic battle," Yellen said at a press conference. "What we can constructively do is talk about, 'what is the state of the economy?'"
- Yellen said that people sometimes use the word recession to refer to "bad inflation," noting that household discomfort doesn't stem from the labor market, which so far, has remained solid.
- Still Yellen emphasized that the economy may be slowing but not in a way that's consistent with a recession, noting that would call for a "broad-based weakening of the economy."
- "That's not what we're seeing right now," Yellen said.
The big picture: Yellen pointed out the economy's contraction in the second quarter was driven by a change in business inventories, a volatile component of GDP that knocked more than 2 percentage points off headline growth.
- The report also showed a slowdown in consumer spending, housing and business investment.