MHMarkets:Janet Yellen: U.S. economy still 'resilient' despite falling GDP

The new GDP report showed the U.S. economy contracted again in the second quarter, but Treasury Secretary Janet Yellen said there was no need to worry that the U.S. is currently in a recession. She said when you look at the economy, it's not what we see now, job creation continues, household finances remain strong, consumers are spending and businesses are growing.

The second-quarter GDP change reading showed a 0.9% drop from the previous quarter, when the economy contracted 1.6%. Yellen said it showed the economy was transitioning to more “steady, sustainable growth.” This slowdown is expected given the strong economic recovery since the outbreak. Noting that headwinds and uncertainties persist, including Russia's war in Ukraine, ongoing supply chain disruptions and global economic instability, Yellen said she believes inflation can fall while the job market can remain partially strong. We have a slowing economy, the labor market is still very tight, and we can see some relief in the labor market, but [it feels] that the labor market is full employment.

Recessions typically involve soaring unemployment across the economy — but the unemployment rate has remained near record lows at 3.6% for four straight months. Recessions typically involve soaring unemployment across the economy, but the unemployment rate has remained near record lows at 3.6% for four straight months. Both the Fed and the White House have cited soaring inflation as their number one challenge. The U.S. Federal Reserve approved another outsized rate hike on Wednesday to push down rising prices.

Federal Reserve Chairman Jerome Powell also said he did not see the economy in a recession. On Thursday, President Joe Biden touted the Reducing Inflation Act, a bipartisan deal to fund initiatives such as health care and clean energy. Biden said these spending efforts will help reduce inflationary pressures and further boost the economy.

Financial data and events to focus on today:

⑪ 20:30 Canada May GDP monthly rate

⑫ 20:30 US June core PCE price index annual rate

⑬ 20:30 US June core PCE price index monthly rate

⑭ 20:30 The monthly rate of personal spending in the United States in June

⑮ 21:45 US July Chicago PMI

⑯ 22:00 US July University of Michigan consumer confidence index final value

⑰ The next day 01:00 US oil for the week of July 29 Total number of wells drilled