“That is not what we’re seeing right now when you look at the economy,” she said. “Job creation is continuing, household finances remain strong, consumers are spending and businesses are growing.”
“Our economy remains resilient” in its rebound from the pandemic, Yellen added.
However, “unacceptably high” levels of inflation — something not seen at this level since the 1970s and early ’80s — is taking a toll on Americans and their finances, Yellen said.
“I think that the discomfort that households feel, it’s not because of the labor market,” she said. “Some may worry that the … labor market will weaken, but I think the biggest burden that’s weighing on household sentiment is inflation.”
Noting that headwinds and uncertainties persist, including Russia’s war in Ukraine, ongoing supply chain snarls, and global economic instability, Yellen said she sees a path where inflation levels can come down while the job market could maintain some of its strength.
“This is a very unusual situation: We have a slowdown, the labor market remains very tight,” she said. “We could see some mild easing of pressures in the labor market yet [feel like] the labor market is operating in full employment.”
Yellen’s comments about the strength of the economy came on the heels of similar sentiment from analysts, policymakers and other economists.
Moody’s Analytics chief economist Mark Zandi told CNN that while the US economy is vulnerable to sinking into a recession, that hasn’t happened yet.
“This is a slowdown. We’re not in recession, certainly not during the first half of this year,” Zandi said. “We created way too many jobs.”
However, the risk of a recession in the near future is elevated, he said, pegging the risk of a recession over the next 12 months at roughly 50/50. “We need to catch a break here to avoid recession. We do need a bit of luck.”
Recessions typically involve surging unemployment across the economy — but the unemployment rate has been at 3.6%, near historic lows, for four straight months. In the current economy, a recession would translate to a loss of 3 million to 4 million jobs, Zandi said.
CNN Business’ Matt Egan contributed to this report.