The country’s top business leaders are telling Janet Yellen they are confident that the U.S. economy is resilient and can outrun a recession, the Treasury secretary will say today, Axios has learned.
Why it matters: Senior Biden officials are convinced the economy is healthier than some Wall Street analysts have suggested. But they know they need to convince the public that it's true.
- This week, they have focused the powers of the presidency — including a Biden speech in Chicago where the president finally embraced the “Bidenomics” label — to double down on the economy before the 2024 election.
- Yellen is drawing on her credibility as an academic and a former Fed chair to provide some intellectual gloss to that optimistic view.
Driving the news: She will use a speech at PosiGen, a solar energy company headquartered in New Orleans, to explain how Biden’s approach can expand “the productive capacity of the American economy.”
- “I continue to believe that there is a path to reducing inflation while maintaining a healthy labor market,” she will say, according to prepared remarks.
- “This sentiment is echoed by business executives I’ve met with, who have increasingly voiced confidence in our economy.”
- "I expect the current strength of the labor market and robust household and business balance sheets to serve as a source of economic strength, even if our economy does cool a bit more as inflation falls."
The big picture: As Biden officials crisscross the country to talk up the economy, and the president's legislative accomplishments, they have been bolstered by solid data from Washington.
- Gross domestic product grew at a 2% annualized rate in the first quarter, a notable upward revision from the most recent estimate of 1.3%, Axios Macro reported yesterday.
- Earlier in the week, a new survey showed that consumer confidence is surging and reached its highest level since early 2022.
- New orders for durable goods jumped 1.7% last month, which followed May’s employment report which showed an addition of 339,000 jobs.
Reality check: Core inflation, which excludes volatile energy costs, is still north of 5 percent. While the Federal Reserve took a pause on its rate hiking schedule, there are strong hints that Fed Chair Jay Powell isn't finished.
- “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go,” Powell said last week.
- The Biden administration continues to believe inflation can be tamed without a significant increase in unemployment, with Yellen suggesting that a slowdown in consumer spending might do the trick.
Flashback: Yellen’s speech Friday will be an updated version of what she called “modern supply-side economics” in a speech to a virtual Davos summit last year.
Be smart: Yellen isn’t doing a touchdown dance, and she will hedge her optimism with the kind of phrases she frequently deployed as a central banker.
- Look for her language on “significant risks ahead” and her acknowledgment that “there are parts of our economy that are slowing down.”
The bottom line: Yellen, along with the rest of Team Biden, wants to accentuate the positive on the economic front.
- They are claiming business leaders as members of what might be called Team Half-Full.
