“You know what we have looks like a soft landing with very good outcomes for the US economy,” Yellen said in a televised conversation on Bloomberg TV. “So, I think there's a lot to be pleased about, [when] you see good strong-spending consumers [who] still have substantial wealth since the pandemic. And I think [this] US growth is making a contribution to stronger global outcomes as well.”
Consumer spending, which accounts for almost 70% of US economic activity, was largely responsible for leading the nation’s recovery from the more than two-year long impact of the coronavirus measures.
Most Wall Street economists had warned at one time or another this year about the potential for a recession as the Federal Reserve hiked rates aggressively to counter inflation.
To fight inflation, the Fed hiked rates 11 times between March 2022 and August 2023, raising them by 5.25% from a base rate of just 0.25%.
The central bank is scheduled to decide on rates again at its next two-day policy meeting ending on November 2. The unchanged reading on federal funds futures as of Thursday indicated the Fed will skip a rate hike again at that meeting, just as it did in September, although it will not likely cut interest rates until late 2024 or 2025 to stimulate growth.
Yellen said high interest rates were a product of solid economic growth.
“I think it's a reflection of the resilience that people are seeing in the US economy that we're not having a recession, that consumer spending and demand continue to be strong,” Yellen said. “The economy is continuing to show tremendous robustness and that suggests that interest rates are likely to stay higher for longer.”
The Commerce Department said the increase in real GDP reflected growth in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment.
Imports, a subtraction in the calculation of GDP, increased, the Commerce Department added.