After the slightly weak performance of US non farm payroll data last Friday, the three major US stock indices all fell on Friday, indicating market investors' concerns about this.
Last Saturday Eastern Time, US Treasury Secretary Yellen attempted to reassure the public and investors, stating that the US economy remains strong and is still on the path to a soft landing, and the "red light" of recession is not flashing.
The US economy remains strong and stable
The US August employment data released last Friday was slightly lower than expected: the non farm payroll, which measures US job creation, increased by 142000 people in August, lower than the Dow Jones forecast of 161000 people; The unemployment rate has dropped to 4.2%, which is in line with expectations.
More noteworthy is that the employment data for July was revised down from 114000 to 89000, while the data for June was revised down from 179000 to 118000. Over the course of two months, a total of 86000 new jobs were added.
This has once again raised concerns about a slowdown in the labor market. The S&P 500 index fell 1.73% last Friday, with a cumulative drop of 4.25% last week, marking the largest weekly decline since March 2023. Meanwhile, the Nasdaq has been falling for two consecutive weeks, with a cumulative drop of 5.77% last week, marking the largest weekly decline since January 2022.
Regarding this, Yellen said at the Texas Forum Forum in Austin, "We have seen a decrease in enthusiasm for recruitment and job vacancies, but we have not seen meaningful layoffs... I am currently concerned about the downside risks in employment, but I believe that what we are seeing now, and I hope we will continue to see, is a good and stable economy
Yellen said that although the current employment growth has slowed down compared with the "recruitment frenzy" when the United States reopened after the COVID-19 epidemic, the economy is "deeply recovering" and "basically in a state of full employment".
The United States is on the road to a soft landing
In Yellen's view, the August non farm payroll report is not without highlights. Firstly, the unemployment rate has slightly decreased to 4.2%, followed by higher employment growth in August compared to July.
After the data was released on Friday, Yellen quickly commented that:
We believe that adding 142000 new jobs per month is a very healthy and sustainable growth rate, which is also what we hope to see. She added that by historical standards, the unemployment rate of 4.2% is still quite low.
Yellen believes that the August non farm payroll report confirms that even if the labor market slows down, it is still healthy. She also expects that the job market will not further weaken. "If job growth stabilizes within this range, I would be very satisfied," she said
In her speech on Saturday, Yellen further mentioned, "For the United States, the various indicators we will monitor - whether it's asset valuations or good leverage levels - look good, and I haven't seen any red lights flashing
Yellen said that the United States is on the path of a soft landing: "It's amazing to be able to meaningfully lower inflation rates like we do. This is what most people call a soft landing