The United States does not expect a recession. On the other hand, there is less confidence in Europe, much more affected by the crisis in Ukraine due to its dependence on Russian energy resources. In any case, this is how US Treasury Secretary Janet Yellen assessed this Wednesday.
“I really don’t expect the United States to go into recession,” she clarified during a press conference ahead of the G7 finance ministers’ meeting in Germany, adding, “I think Europe is perhaps a little more vulnerable and exposed ahead of the US.”
Thus, he joins the remarks of the president of the US central bank, the Federal Reserve System (FRS), Jerome Powell, who on May 4 assured that the US economy remains stable, even despite the slowdown, and that it does not represent any immediate consequences. recession risk.
“The current situation is fraught with risks both in terms of inflation and potential (economic) downturns. »Janet Yellen added. But ” we currently have a lot of momentum in the economic recovery,” in particular with “extremely low unemployment,” she softened.
Indeed, the US economy has enjoyed a buoyant economic recovery since the coronavirus pandemic, thanks in part to the federal government’s extensive stimulus plans. But in recent months, inflation and disruptions in global supply chains, caused in part by the war in Ukraine and the coronavirus pandemic in China, have dampened that momentum. Thus, in the first quarter of 2022, the country’s gross domestic product fell by 1.4%. technical downturn, i.e. two quarters in a row in decline. Some experts, however, do not rule out a recession early next year if prices remain high despite the rate hike.
The recession scenario is explained by the rate hikes needed (launched in March) to contain demand and therefore inflation. The equation to be solved is a tricky one: how much to raise key rates this year to control rising prices without triggering a recession that would have employment implications.
Europe in slow motion
On the other hand, dThere are more fears on the other side of the Atlantic. IT HASWith slow growth and record inflation, the European economy, barely recovering from the effects of the pandemic, bears the brunt of the shocks of the war in Ukraine and risks recession in the coming months. Eurozone growth, which highly dependent on energy resources supplied from Russia, sluggish. In the first quarter, it was 0.3% compared to the previous quarter, and it is expected to decrease further in the second quarter. All because of inflation of 7.4% in April, mainly due to energy prices.
“Eurozone GDP is expected to contract in the second quarter as the effects of the war in Ukraine and rising energy prices increasingly weigh on household incomes and consumer confidence, making life difficult for industrialists,” said Andrew Kenningham, an expert at Capital Economics.
German producers will be hit “harder” than other European countries, he said, “but rising energy prices will affect the entire region, as will falling demand for export products and business confidence.”
Washington is ready to remove some tariffs from China
To fight inflation, the Biden administration is questioning certain customs duties against China, imposed under a mandate from former U.S. President Donald Trump in retaliation for Chinese trade practices deemed “unfair.” US Treasury Secretary Janet Yellen agreed. Some of these tariffs “are detrimental to consumers and businesses and are not strategically important,” she said on Wednesday. to the press ahead of the G7 finance ministers’ meeting in Germany.
“They don’t address the real issues we have with China, whether it’s supply chain vulnerabilities, national security concerns, or other unfair trade practices,” the secretary of state said in a statement to the US Treasury Department. “We’re having these discussions” about the future of customs tariffs, Janet Yellen added.
The US imposed duties on $350 billion worth of US imports. China automatically expire on July 6 unless a company asks to keep them, and the Biden administration is under pressure to remove them due to record U.S. inflation.