There’s a high likelihood that the “unacceptably high” prices of recent months won’t recede in 2022, according to Treasury Secretary Janet Yellen, a report from Bloomberg said.
She said the economy will slow down, though she doesn’t think a recession is inevitable.
“We’ve had high inflation so far this year, and that locks in higher inflation for the rest of the year,” she said Sunday on ABC’s “This Week.”
This comes as May saw inflation at 8.6%, which was a 40-year high showing the high pressures on the economy.
The inflation, according to Yellen, is spurred from “global, not local” reasons.
She said there were several factors including disruption in the energy supply from the war in Ukraine, and goods from China have been disrupted because of COVID lockdowns.
Loretta Mester, the Federal Reserve Bank of Cleveland president, said Yellen was right that growth would slow and added that a recession’s likelihood was increasing.
The report quotes Mester as saying it’s likely to be several years before the year-on-year headline inflation rate can return back to the Fed’s 2% goal.
Bloomberg also wrote that, with the higher prices putting the hurt on peoples’ wallets, there’s likely to be an economic downturn by the start of 2024.
The various economic woes have been in the news for weeks now.
Read more: Retailers Tout Value and Convenience as Consumers Brace for Recession
The consumers reportedly are looking more at value, convenience and basic necessities whenever they shop.
The report says consumers are changing their lifestyles and retailers are responding by focusing more on the necessities instead of “excess discretionary inventory.”
This comes as the U.S. is likely to see a recession even after another one just two years ago.
To combat it, the Fed is looking to put another round of rate hikes in place to hopefully douse inflation at the expense of economic growth.
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