With the economy looming large in the 2024 election, Treasury Secretary Janet Yellen said Thursday she sees “no reason” for a recession this year and insisted consumers are turning more optimistic about their finances.
“I think 2024 is going to be a very good economic year. That said, there are always risks,” Yellen told ABC News Correspondent Elizabeth Schulze in an exclusive interview in Chicago.
“Consumers and households feel confident enough about their own personal financial situation and about the economic outlook to be spending in a way that’s creating jobs, creating growth and is providing them with the income to go on doing that,” Yellen said. “So, I see no reason why that can’t continue.”
Treasury Secretary Janet Yellen speaks during an interview with ABC News’ Elizabeth Schulze, on Jan. 25, 2024.
ABC News
Yellen’s comments come on the back of a new GDP report showing a stellar year of economic growth that defied economists’ expectations of a recession, a point that the Biden administration is hoping it can use to alter voters’ largely pessimistic feelings about the economy ahead of the election.
“Recent surveys suggest that picture is changing. We’ve seen a massive increase, improvement in consumer sentiment,” Yellen said, referring to a closely watched consumer sentiment index from the University of Michigan that reached its highest level this month since July 2021.
Eager to capitalize on the economic optimism, Yellen and President Joe Biden both visited the Midwest Thursday. In a major speech in Chicago, Yellen pointed to the administration’s policy successes in infrastructure, manufacturing and clean energy, while just a few hours away, the president visited a new bridge construction project funded by his legislation in the key swing state of Wisconsin.
Treasury Secretary Janet Yellen speaks during an interview with ABC News’ Elizabeth Schulze, on Jan. 25, 2024.
ABC News
Yellen, not normally one to wade into the political fray, also took direct hits at former President Donald Trump, the expected Republican candidate to take on Biden.
Asked about recent comments from JP Morgan CEO Jamie Dimon indicating that businesses might welcome Trump back for his economic policies, Yellen said bluntly that Trump may have helped big companies, but he “did nothing for the middle class.”
“Wealthy corporations did very well. They saw their tax rate go from 35% to 21%. And so that was a benefit that they enjoyed,” Yellen said, attacking Trump for his signature tax cut legislation.
“It resulted in $2 trillion of additional deficits and really did absolutely nothing for the middle class that was struggling,” she said.
By contrast, she touted the successes of the Biden administration’s investments that brought the country back from the brink of economic hardship post-pandemic in “the fairest recovery on record.”
But Yellen acknowledged the Biden administration has more work to do on its goal of boosting the middle class, referring to high costs for child care, food and housing.
“Apartment rents, food are maybe 20% higher than they were before the pandemic. And I think that’s something that influences sentiment,” she said.
“But what’s happening for more than a year now, and I expect this to continue, is wages are rising more rapidly than prices. Price increases have now just about normalized and wages continue to increase. And Americans are getting ahead and they see their financial situation improving,” she said.
She also drew a sharp contrast with her generation growing up, admitting the American dream is now harder to achieve.
In a recent ABC News/Ipsos poll, only 27% of respondents said the American dream still holds, down sharply from 50% when the question first was asked in 2010.
“When I was growing up, 80 or 90% of people in my generation did better than their parents did. And those numbers have dropped substantially. And that’s what the American dream is about,” Yellen said.
“There are parts of the country that have really not seen much economic progress,” she said. “That’s something that has to change for that feeling that the American dream is alive and well.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
