The chairman of the US Federal Reserve (Fed) considered yesterday that the US economy is not in recession, although he warned that he did not see the country’s GDP forecasts, which will be released on Thursday.
“I don’t think it’s likely that the US economy is in recession right now,” said Jerome Powell, quoted by the Efe news agency, during his press conference to explain the 0.75 point increase in the official interest rate today. announced by the Fed.
For Powell, the strength of the US labor market – which has seen an unemployment rate of 3.6% for four months – will be enough to convince the public that the country is not in a recession.
The governor of the central bank of the world’s largest economy added that he does not believe that GDP is a reliable indicator for dictating whether or not a country is in recession, but pointed out that it is not up to the Fed to determine this.
Powell’s position coincides with that of US President Joe Biden, who on Monday told the media he believed there would not be a recession in the US economy.
For the US head of state, the good employment figures could contribute to a reversal of the growth registered in the first quarter of the year, when it contracted 1.4% in annualized values.
US gross domestic product (GDP) growth for the second quarter will be released on Thursday.
In April, the Commerce Department estimated that the US economy contracted 1.4% in the first quarter, against forecasts for growth of 1.1%.
A country is considered to be in recession after two consecutive quarters of negative growth.
The Fed today decided to raise interest rates by 75 points, the fourth hike this year, raising benchmark rates to between 2.25% and 2.50%, the highest since 2018.
“The latest spending and production indicators have slowed down. However, job creation has remained robust in recent months and the unemployment rate is low.
The rise is in line with what had been forecast by analysts.
In March there was an increase of 25 basis points, moving to an increase of 50 basis points in May and 75 in June.
In the same document, the Federal Reserve underlined that the war in Ukraine is causing “enormous difficulties”, both on a human and economic level, creating “additional pressure” on inflation.
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