(CHICAGO) — With the economy looming large in the 2024 election, Treasury Secretary Janet Yellen said Thursday she sees “no reason” for a recession this year and insisted consumers are turning more optimistic about their finances.
“I think 2024 is going to be a very good economic year. That said, there are always risks,” Yellen told ABC News Correspondent Elizabeth Schulze in an exclusive interview in Chicago.
“Consumers and households feel confident enough about their own personal financial situation and about the economic outlook to be spending in a way that’s creating jobs, creating growth and is providing them with the income to go on doing that,” Yellen said. “So, I see no reason why that can’t continue.”
Yellen’s comments come on the back of a new GDP report showing a stellar year of economic growth that defied economists’ expectations of a recession, a point that the Biden administration is hoping it can use to alter voters’ largely pessimistic feelings about the economy ahead of the election.
“Recent surveys suggest that picture is changing. We’ve seen a massive increase, improvement in consumer sentiment,” Yellen said, referring to a closely watched consumer sentiment index from the University of Michigan that reached its highest level this month since July 2021.
Eager to capitalize on the economic optimism, Yellen and President Joe Biden both visited the Midwest Thursday. In a major speech in Chicago, Yellen pointed to the administration’s policy successes in infrastructure, manufacturing and clean energy, while just a few hours away, the president visited a new bridge construction project funded by his legislation in the key swing state of Wisconsin.
Yellen, not normally one to wade into the political fray, also took direct hits at former President Donald Trump, the expected Republican candidate to take on Biden.
She touted the successes of the Biden administration’s investments that brought the country back from the brink of economic hardship post-pandemic, explicitly drawing a contrast with policies under Trump, who she said “did nothing for the middle class.”
“Wealthy corporations did very well. They saw their tax rate go from 35% to 21%. And so that was a benefit that they enjoyed,” Yellen said, attacking Trump for his signature tax cut legislation.
“It resulted in $2 trillion of additional deficits and really did absolutely nothing for the middle class that was struggling,” she said.
But Yellen acknowledged the Biden administration has more work to do on its goal of boosting the middle class, referring to high costs for child care, food and housing.
“Apartment rents, food are maybe 20% higher than they were before the pandemic. And I think that’s something that influences sentiment,” she said.
“But what’s happening for more than a year now, and I expect this to continue, is wages are rising more rapidly than prices. Price increases have now just about normalized and wages continue to increase. And Americans are getting ahead and they see their financial situation improving,” she said.
She also drew a sharp contrast with her generation growing up, admitting the American dream is now harder to achieve.
In a recent ABC News/Ipsos poll, only 27% of respondents said the American dream still holds, down sharply from 50% when the question first was asked in 2010.
“When I was growing up, 80 or 90% of people in my generation did better than their parents did. And those numbers have dropped substantially. And that’s what the American dream is about,” Yellen said.
“There are parts of the country that have really not seen much economic progress,” she said. “That’s something that has to change for that feeling that the American dream is alive and well.”
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