Yellen: US financial system stays steady and is heading for a “smooth touchdown”

U.S. Treasury Secretary Janet Yellen speaks and listens to a presentation during a tour of the IRS processing facility September 6, 2024 in Austin, Texas.

Brandon Bell |

Treasury Secretary Janet Yellen sought to reassure the public on Saturday that the U.S. economy remained strong despite a series of weak jobs reports that have unsettled investors and weighed on the stock market.

“We're seeing less excitement in hiring and job openings, but we're not seeing meaningful layoffs,” Yellen said at the Texas Tribune Festival in Austin. “I'm aware of the downside risks on the employment side, but I think we're seeing a good, solid economy and I hope we'll continue to see it.”

Yellen said job growth has slowed compared to the “hiring spree” when the U.S. reopened after the Covid-19 pandemic, but the economy is “in the midst of recovery” and “basically operating at full employment.”

The Treasury secretary's comments come a day after the Bureau of Labor Statistics reported another month of cooler-than-expected employment data.

Nonfarm payrolls, a measure of U.S. job creation, rose 142,000 in August, below the Dow Jones forecast of 161,000. The decline renewed concerns about a slowing labor market. The S&P 500 fell on Friday, ending the week with its worst reading since March 2023.

However, the unemployment rate fell slightly to 4.2% and employment growth in August was higher than in July. Stock markets saw a sharp sell-off early last month after the weak July report sparked renewed recession fears in the US.

Yellen tried to calm nervousness about the economic situation on Saturday: “I don't see any flashing red lights.”

The jobs data has raised concerns about whether the Federal Reserve can achieve a so-called “soft landing,” raising interest rates to bring inflation under control and then cutting rates before the economy falls into recession. The Fed is widely expected to cut rates later this month.

Yellen said the U.S. is on that path: “It's really amazing that we've been able to bring inflation down so significantly. Most people would call that a soft landing,” she said.