New York: The U.S. economy is strong amid robust consumer spending but some areas are slowing down, U.S. Treasury Secretary Janet Yellen said, adding that she expects continued progress in bringing inflation down over the next two years with a strong labor market, Reuters reported.
Yellen, in a CNBC interview, also said that while banks may struggle with commercial real estate and face some consolidation, there is ample liquidity in the system and banks should generally be able to withstand any strain.
Yellen said that inflation can subside while maintaining a strong labor market, with unemployment in the 4% range, up slightly from the 3.7% reading in May.
“We’ve always thought an unemployment rate with four as the first digit is a very strong labor market,” Yellen said. “Clearly, Americans feel good about their job prospects. They’re finding work quickly.”
She said the economy has slowed somewhat, easing pressures in the labor market, but “we still have a very healthy labor market, wage gains are significant.”
Yellen said that legislation to lift the debt ceiling and reduce U.S. deficits by more than $1 trillion over a decade would support the Federal Reserve’s efforts to bring down inflation.
Asked whether she would support more consolidation among banks, she said the current diverse banking system with strong community banks, regional banks and large banks was a “strength” for the U.S. economy, but some further consolidation was likely.
Yellen said she would not want to see U.S. banking diversity threatened, “but certainly in this environment, some banks are experiencing pressure on earnings and there is a motivation to see some consolidation. And it wouldn’t surprise me to see some of that going forward,” Reuters reported.
