US Treasury Secretary Janet Yellen announced on Friday that the US economy has achieved a long sought after soft landing, which is unusual and even rare in history. In this situation, high inflation has been suppressed, but there has been no serious economic slowdown.
Yellen said in an interview that day, "What we are seeing now, I think it can be called an economic soft landing, and I hope it can continue."
Earlier data released by the US Bureau of Labor Statistics showed that the non farm payroll in the United States increased by 216000 people after a quarterly adjustment in December 2023, stronger than market expectations of 170000 people, the highest increase since September last year, indicating that the labor market remains stronger than expected as the Federal Reserve attempts to slow economic growth.
However, the non-farm report also suggests that there is still an upward risk of inflation, prompting investors to reduce their bets that the Federal Reserve will start cutting interest rates in March.
Yellen focused on the latest salary data, which showed that the average hourly wage in December increased by 0.4% month on month and 4.1% year-on-year, higher than market expectations of 0.3% and 3.9%, respectively. Yellen pointed out that the salary increase has exceeded the price increase, indicating that American workers are achieving success, and the progress of middle-income families is very obvious.
Yellen declined to comment on the question of when the Federal Reserve should cut interest rates, but she said that the Federal Reserve has handled monetary policy well. "The trends in the labor market, overall economy, and inflation indicate that they have made a series of wise decisions."
For over two years, despite the Federal Reserve's very aggressive tightening policies, the US Treasury Secretary has consistently refused to accept the most pessimistic predictions about the US economy. Many economists believe that Yellen is being stubborn, but it has proven that Yellen's expectations are correct.
In recent weeks, Yellen seems to be celebrating this victory. Last December, Yellen pointed out, "In my opinion, inflation is significantly decreasing, the labor market remains strong, and the economy continues to grow. I believe we are on the path of a soft landing."
She reiterated on Friday, "There is a lot of pessimism about the economy, but it turns out to be unfounded. A year ago, most forecasters believed we would fall into a recession. Obviously, this did not happen."
Regarding the non farm payroll report of that day, Chairman of the White House Committee of Economic Advisers Bernstein commented that the report was very strong, indicating that the US economic recovery is resilient and will avoid an economic recession.