In response to the weaker-than-expected initial estimate for U.S. gross domestic product from January through March, Yellen stated that the U.S. economy continues to perform well. The Commerce Department’s report revealed that GDP growth was below economists’ expectations at 2.4%, which is less than half the pace in the fourth quarter of 2023 due to drags from trade and private inventories.
Furthermore, the report also showed a concerning increase in inflation, with the personal consumption expenditures price index excluding food and energy rising at a faster pace of 3.7% annually, compared to 2.0% in the previous quarter. Despite this surge in inflation, Yellen played down its significance, indicating that it did not necessarily call for an increase in unemployment or cooling measures in other areas of the economy to bring inflation back to the Federal Reserve’s 2% target.
Despite these challenges identified in the report, Yellen remained optimistic about the overall performance of the U.S. economy. She emphasized that while current inflation jump may require some measures to maintain stability, it does not necessarily mean drastic action needs to be taken immediately to address it.
Yellen’s comments reflect a cautious yet positive outlook on the state of the U.S. economy amidst ongoing challenges such as trade tensions and supply chain disruptions.
In summary, despite weaker-than-expected initial estimate for U.S GDP growth and concerning increase in inflation, Yellen remains optimistic about the overall performance of U.S economy while emphasizing caution when addressing inflation concerns.