Yellen Assures: U.S. Economy on Track for 'Soft Landing' Despite Slower Job Growth
Yellen’s Optimistic Outlook Amidst Job Data Concerns
Treasury Secretary Janet Yellen offered reassurance regarding the strength of the U.S. economy on Saturday, stating that the country is experiencing a “soft landing” despite recent weak job reports. Speaking at the Texas Tribune Festival in Austin, Yellen emphasized that the economy remains robust and is “deep into a recovery,” noting the absence of significant layoffs.
Current Job Market Trends
Yellen acknowledged a slowdown in job growth compared to the post-pandemic hiring surge but highlighted that the U.S. is effectively operating at full employment. Recent data from the Bureau of Labor Statistics showed that nonfarm payrolls increased by 142,000 in August, falling short of the Dow Jones forecast of 161,000. This shortfall has fueled concerns about a potential slowdown in the labor market and contributed to market volatility, with the S&P 500 recording its worst week since March 2023.
Despite these concerns, the unemployment rate edged down to 4.2%, and job growth in August surpassed that of July. Yellen attempted to ease fears about the economy’s trajectory, asserting, “I don’t see red lights flashing,” and emphasizing that the current conditions do not indicate a recession.
The Path to a Soft Landing
Yellen’s comments come amidst discussions about the Federal Reserve’s strategy to achieve a “soft landing”—raising interest rates to control inflation and then potentially cutting them before a recession occurs. The Fed is expected to lower interest rates this month, and Yellen highlighted the progress made in reducing inflation as evidence of this soft landing. “It really has been amazing to be able to get inflation down as meaningfully as we have. This is what most people would call the soft landing,” Yellen said.
Market Reactions and Future Outlook
The weaker-than-expected job numbers have sparked renewed concerns about the economy’s future, particularly about whether the Fed’s policies will successfully balance inflation control with economic growth. The stock market experienced significant declines last month following the disappointing July jobs report, exacerbating fears of a recession.
As the economy continues to recover from the pandemic, Yellen remains optimistic about its trajectory. She stressed that while the job market shows signs of cooling, it reflects a transition from the earlier frenzy rather than a signal of economic distress.