Yellen warns of 'negative spillover' from China's economic slowdown
Piper Sandler chief global economist Nancy Lazar details her economic expectations for the second half of the fiscal year on ‘Mornings with Maria.’
Treasury Secretary Janet Yellen warned on Monday there is a risk of contagion from the growing slowdown in the Chinese economy, but maintained that a recession in the U.S. is unlikely this year.
New data released Monday revealed that gross domestic product in China grew just 6.3% in the three-month period from April to June as a result of falling exports, weak consumer spending and a prolonged downturn in the vital property market.
The lower-than-expected data painted the picture of an anemic economy that is failing to bounce back from the COVID-19 pandemic and strict lockdowns.
CHINA'S ECONOMY MISSES GROWTH FORECASTS, RAISING ODDS OF MORE SUPPORT FOR ITS TEPID RECOVERY
On top of that, the youth unemployment rate in China surged to a new record high, with the jobless rate of those between the ages of 16 and 24 jumping to 21.3% last month, according to official data.
«Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia, and slow growth in China can have some negative spillovers for the United States,» Yellen said during an interview with Bloomberg. «Growth has slowed, but our labor market continues to be quite strong,» Yellen said. «I don’t expect a recession.»
Then-Federal Reserve Chair Janet Yellen holds a news conference after a two-day Federal Open Market Committee (FOMC) meeting in Washington on Dec. 13, 2017. (Reuters/Jonathan Ernst / Reuters Photos)
The U.S. economy is already battling higher interest rates, stubborn inflation and ongoing fears of a recession this year or next. Inflation
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