\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/09\/GettyImages-2161362109-e1725747090472.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Treasury Secretary Janet Yellen said there are no \u201cred lights flashing\u201d for the financial system, and reiterated her view that the US economy has reached a soft landing even as job growth weakens.<\/p>\n
\u201cFor the US, the kinds of metrics that we would monitor that would summarize risks \u2014 whether it\u2019s asset valuations or a good degree of leverage \u2014 things look good, I don\u2019t see red lights flashing,\u201d Yellen said Saturday in a fireside conversation with Bloomberg News\u2019 David Gura at the Texas Tribune Festival. \u201cI\u2019m attentive to downside risks\u201d on employment, she said, while saying job growth is solid.<\/p>\n
The Treasury chief spoke a day after US equities capped the biggest weekly selloff since the March 2023 regional banking crisis \u2014 roiled by a weaker-than-expected gain in payrolls that stoked concern the Federal Reserve will prove late to begin lowering interest rates. The S&P 500 Index slid more than 4% over the week.<\/p>\n
\u201cWhile there are risks, it really has been amazing to be able to get inflation down as meaningfully as we have\u201d while maintaining strong growth, Yellen said in Austin. \u201cThis is what most people would call a soft landing.\u201d<\/p>\n
Yellen highlighted \u201cwages going up at a decent clip,\u201d surpassing the pace of inflation, along with the lack of any mass layoffs. Monthly job gains are at about the level needed to absorb new entrants to the labor market, she said.<\/p>\n
The August jobs release showed US hiring fell short of forecasts, with nonfarm payrolls rising 142,000. The three-month average hit the lowest since mid-2020, according to Bureau of Labor Statistics data, but the unemployment rate edged down to 4.2% \u2014 the first decline in five months, reflecting a reversal in temporary layoffs.<\/p>\n
Yellen also said she would welcome a visit to the US by her Chinese counterpart, and is open to another visit of her own to China, as she underscored the importance of the world\u2019s two largest economies engaging with each other. \u201cI certainly may go back there \u2014 I would welcome a visit by my Chinese counterpart, and my guess is that we will have one way or another a visit.\u201d<\/p>\n
Yellen met for hours with her counterpart Vice Premier He Lifeng during a visit to Beijing in April, continuing the re-engagement between the two nations that began last November with President Joe Biden\u2019s sit-down with President Xi Jinping.<\/p>\n
Asked about the status of a review into Nippon Steel Corp.\u2019s $14.1 billion takeover of United States Steel<\/a> Corp., Yellen declined to comment on any specifics. Biden plans to kill it as soon as the so-called CFIUS referral lands on his desk, Bloomberg reported this week. Vice President Kamala Harris has also said US Steel should remain\u00a0domestically owned<\/a>\u00a0and operated.<\/p>\n The Treasury secretary heads the CFIUS panel, which vets takeovers perceived to entail security risks. Yellen underscored that the US remains open to foreign investment.<\/p>\n \u201cIt is a priority to maintain an open and healthy environment for foreign countries to invest in the US just as we\u2019re investing in many countries around the world,\u201d Yellen said. Still, she stressed that foreign investment in the US can pose national security concerns.<\/p>\n With respect to potential threats to the financial system, Yellen said \u201cthere\u2019s much less regulation of the financial system outside the banking system, and there are risks there.\u201d<\/p>\n While dangers stemming from money market funds have hopefully been successfully dealt with, there are a few areas outside core banking that remain of concern, she added. \u201cCybersecurity is a huge and growing risk, we\u2019re working on that.\u201d<\/p>\n Over time, the fiscal trajectory also needs to be addressed, she said.<\/p>\n \u201cA challenge we face in the United States is that the level of tax revenue has declined in comparison with historic norms,\u201d in part thanks to former President Donald Trump\u2019s 2017 tax-cut package, Yellen said.<\/p>\n Looking out 10 to 20 years, she said, Social Security and Medicare spending will also prove a major drain. \u201cAging of the population and expansion of those programs can put us on a fiscal path that\u2019s not sustainable.\u201d<\/p>\n Budget \u201cdeficits need to be brought down to the point where the interest costs on the debt remain manageable,\u201d she said, reiterating her preferred metric for sustainability \u2013 keeping the inflation-adjusted interest cost relative to gross domestic product at less than 2%.<\/p>\n The Biden administration\u2019s proposed budget would keep the US within that 2% ratio over the coming decade, Yellen said.<\/p>\n<\/div>\nForeign Investment<\/h3>\n
Recommended reading:<\/strong>
In our new special issue, a Wall Street legend gets a radical makeover, a tale of crypto iniquity, misbehaving poultry royalty, and more.
Read the stories.<\/a> <\/div>\n