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There are no signs that the US economy is in recession, but warns of a government shutdown

By Andrea Shalal and Doina Chiacu

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said on Monday she saw no signs the U.S. economy is entering a downturn but warned that Congress’s failure to pass legislation to keep the government running risk that the momentum of the economy would slow down.

“I don’t see any signs that the economy is at risk of a downturn,” Yellen told CNBC, noting that the U.S. labor market also remained strong and inflation fell.

“There is absolutely no reason for a closure,” she said. “Creating a situation that could cause a loss of momentum is something we don’t need as a risk at this point.”

Yellen said it is premature to assess the impact of a United Auto Workers strike against the Detroit Three U.S. automakers, one of the most ambitious U.S. industrial labor actions in decades, noting that it would depend on how long it lasts last and who is affected by it.

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She underscored President Joe Biden’s commitment to collective bargaining and ensuring workers “come first, too” as the sector performed well.

She said the labor market remained strong but was cooling and “not as hot as before”, which was important given the target of bringing inflation back to 2%.

Yellen, the former Federal Reserve chairman, said the central bank’s moves to raise interest rates were starting to impact the housing market, but consumer spending remained “pretty robust.”

She said the Biden administration was closely monitoring gasoline prices after the recent increases, and Biden wanted to ensure prices remained affordable for Americans.

(Reporting by Andrea Shalal and Doina Chiacu; Editing by Mark Porter and Andrea Ricci)

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