Treasury Secretary Janet Yellen called China’s economic woes a “risk factor” for the US, but one that doesn’t significantly dent her optimism for the American economy.
“China’s slowdown will have the largest impact on its Asian neighbours, but there will be some spillovers to the United States,” Yellen told reporters following a speech in Las Vegas, where she’s touting the economic policy accomplishments of the Biden administration.
“That said, I feel very good about US prospects overall. Let’s call that a risk,” she said, referring to China.
For the US, she said, “we’re seeing a slowdown in growth, but growth that remains healthy, a job market that is very strong and inflation that coming down.”
Yellen’s comments come days after President Joe Biden blasted China’s economic problems as a “ticking time bomb” and referred to Communist Party leaders as “bad folks.” Speaking at a political fundraiser on August 11, Biden said China was in “trouble” because its growth had slowed and due to its high unemployment rate.
Worries continued to mount this week over the outlook for growth in China. The yuan fell to the weakest level since November after the release of a series of disappointing economic figures. The currency has now tumbled about 5% this year, the worst performer in Asia after the yen.
Among the worst readings for the Chinese economy, bank loans slid to a 14-year low, consumer and producer prices both declined, and exports slid the most since February 2020.
By contrast, Yellen drew attention to the surprising strength of the US labour market despite the Federal Reserve’s most aggressive rate-hiking campaign in decades.
Asked why polls showed most Americans didn’t feel the economy was doing well, Yellen responded by saying their view was much more positive when they’re asked how they are doing personally.
“When Americans are asked about their own personal financial situation, 70% or more say they feel very good,” she said. “When they’re asked about the economy overall, they have weaker views.”
In an interview with CNN later on Monday, Yellen also commented on the continuing impact of the Russia’s war in Ukraine on the global and US economies. She said Russia’s recent decision to withdraw from an agreement to allow Ukrainian grain to exit the Black Sea was raising world food prices and hurting the poorest countries the most.
She also noted that Russia was suffering from the war, as well.
“The ruble has declined in value, which is a reflection of the fact that our program of sanctions with our allies, and the war, is causing a drain on the Russian economy,” she said.
Russia’s central bank called an extraordinary meeting set for Tuesday after the ruble crashed through the level of 100 to the dollar for the first time since March 2022.
© 2023 Bloomberg
