president al gore who said the bill is, quote, long overdue and a necessary step to ensure the united states takes decisive action on the climate crisis that helps our economy and provides leadership for the world by example inflation hawks like former secretary of statetreasury larry summers says this bill is fighting inflation this bill is fighting inflation. progressive leaders like senator elizabeth warren said, quote, this bill -- this is a bill that truly is about fighting inflation, bringing down the cost for families, and putting our country on a souner economic footing. here is how it works first, the bill finally delivers on a promise that washington has made for decades to the american people we are giving medicare -- we are giving medicare the power to negotiate for lower prescription drug prices which means seniors and consumers will pay less for their prescription drugs a savings of $290 billion and in

addition it also changes the circumstances for people on medicare by putting a cap of maximum $2,000 a year, pay no more than $2,000 a year no matter how many prescriptions they have for all prescription drugs which is important for people with cancer and long-term diseases it's a godsend and will be a godsend for many families. the bill locks in place lower health care premiums for the next three years for millions of families that get coverage under the affordable care act. $800 a year for 13 million people third, it invests $369 billion granted i call for $500 billion plus, but invests $369 billion to secure energy future and to address climate crisis bringing down family energy bills by

hundreds of dollars by providing working families tax credits it gives folks rebates to buy new and efficient appliances to weatherize their homes and tax credits but also gives consumers a tax credit to buy any electric vehicle or fuel cell vehicle new or used and tax credit $507 if those vehicles were made in america. this investment in environmental justice is real. it provides tax credits that will create thousands of good paying jobs, manufacturing jobs and clean eny, solar projects, wind projects, clean hydrogen, carbon capture projects and more by giving tax credits for those who bill these projects here in america. let me be clear this bill would be the most significant

legislation in history to tackle the climate crisis and improve our energy security right away cutting emissions and accelerating clean energy a huge step forward begin to pay toward their fair share in taxes by putting in place a corporate minimum tax. i know you've never heard me say this before, it will come as a shock to you, 55 of the fortune 500 companies pay no federal income tax in 2020 you've only heard me say that about 10,000 times but the fact is they have a collected income over $40 billion this bill ends that. whatever the number turns out to

be fifth, this package will reduce the federal deficit by over $300 billion. already on my watch deficits come down my first year by $350 billion and a record $1.7 trillion at the end of this fiscal year. now this bill is going to keep that progress going. yes, i will say it again, this will bring down the deficit, bring down the deficit the sixth point i want to make this bill will not raise taxes on anyone making less than $400,000 a year. and i promise, a promise i made during the campaign and one that i've kept. i know it can sometimes seem nothing gets done in washington. i know it never crossed any of your minds, but the work of the government can be slow and frustrating and sometimes even infuriating.

the hard work of hours and days and months from people who refuse to give up pays off history is made, lives are changed. with this legislation we are facing up to some of our biggest problems and we're taking a giant step forward as a nation that didn't just happen on this inflation reduction bill it also happened yesterday when the senate made the bipartisan decision as a nation to invest in america's manufacturing technology of semiconductors and additional funding for basic research and development in the cutting edge industries of the 21st century if the house passes this bill i want to thank speaker pelosi i think she will get done for her leadership here, it has added to the benefit -- it has the added benefit of creating tens of thousands of good paying -- additional good paying jobs, lowering inflation the ability to not only compete with china for the future but to

lead the world you've heard me say 1,000 teams we have to invest in research, development and growth i hope that the house will pass this bill today. my plea is put politics aside. get it done. we need to lower the cost of smart phones, consumer electronics and so much more all of these things are powered, most everything in our lives is powered by the semiconductors and tiny computer chips the size of a fingernail tip. look, we should pass this today and get moving i know the compromise on the inflation bill doesn't include everything that i've been pushing for since i got to office i'm going to keep fighting in the future to bring down the cost for working families and middle class families like affordable child care.

preschool, the cost of preschool, housing, keeping students -- helping students with the cost of college, now it's a fancy way of saying the gap expanding medicaid in states refuse to do it. it's a compromise but it's often how progress is made by compromises. and the fact is that my message to congress is this. this is the strongest bill you can pass to lower inflation, cut the deficit, reduce health care costs tackle the climate crisis and promote energy security. reducing the burdens facing working class and middle class families so pass it pass it for america. i'll have more to say on this later. i want to thank leader schumer

and manchin, joe manchin, for the extraordinary effort that it took to reach this result. thank you. let me speak to one other issue, the gdp and whether or not we are in a recession both chairman powell and many of the significant banking personnel and economists say we're not in a recession let me give you what the facts are in terms of the state of the economy. number one, we have a record job market of -- record unemployment of 3.6% today. we've created 9 million new jobs this year. businesses are investing at record rates

foreign businesses are investing in america, $100 billion already announced by intel, samsung and texas instruments. general motors, hyundai, tesla and more announced $22 billion in new investment batteries and medical devices creating another 16,000 jobs here in america and this is powering the strongest rebound in american manufacturing in over three decades creating 613,000 manufacturing jobs passing the chips bill will put another $72 billion for incentives and tax credits to expand semiconductor production. and the inflation reduction act

will add $370 billion in clean energy tax credits in reconciliation of solar panels, wind turbines and critical materials processing that doesn't sound like a recession to me. thank you very much. president biden wrapping up remarks on the inflation reduction act, the surprise deal between manchin and schumer, one of several live events out of washington today janet yellen is set to speak on the economy on the heels of the gdp report the president just referenced, the second negative print in a row setting off alarm bells about the economy. we'll bring the remarks to you live as soon as they do begin. over to dominic chu. that ten-year yield is catching my attention, dom. >> it's not just that.

people saying that maybe we are in a recession, contrary to what president biden may be saying right now, you think the markets would be skittish about it but they're not. we had 1.5% gains, 2.5 for the s&p, 4% for the nasdaq and we're adding on to those this is session highs, the dow down 250 points so a big reversal there the s&p is solidly above 4,000, up 28, and our third percent advance up 42 points, 12,074 the last trade there one of the places we are seeing the policy end of things in washington affect the markets in a very direct way is because of this new plan to kind of add to new energy, alternative energy infrastructure some are tied to energy infrastructure look at constellation up 16%

end phase up anywhere from 5% to 26% on those moves and the solar is up 6% as well and meta platforms down and microsoft down, apple and amazon two very consequence earnings reports when it comes to technology and consumer discretionary. just about flat on the recession. keep an eye on apple, on amazon, big tech still in focus. >> wow gdp contracting for a second straight quarter but in the press conference fed chair jay powell said gdp isn't the only thing he's watching and we're

not in a recession listen >> if you think about what a recession really is it's a broad based decline across many industries that sustain for more than a couple months and a bunch of specific tests and it just doesn't seem like that what we have right now doesn't seem like that the real reason the labor market is just sending a strong signal of economic strength that makes you question the gdp data. >> focusing on the labor market and the cpi in the coming months joining mean is the chief economist at wells fargo great to check in with you what do you think is happening >> well, kelly, there certainly is a slowdown going on we see that in the gdp numbers if we want to focus on that. the year over year rate that kind of smooths out the quarterly volatility in the first year the economy was up 3.6% on a year over year

basis. only up over 1% right now. there's clearly a slowdown going on we're probably not yet in a recession but clearly things are slowing out there. >> i do think it's worth pointing out how much is strong nominal growth that's a huge demand push if you want to call it that >> that's right. the combination of real gdp growth and inflation and the vast majority is inflation we like to focus on the real sort of numbers because at the end of the day what we're looking at is the ability to buy goods and services that's why you look at the real side of things >> so the recession question to me on the one hand we're already there. if you wanted to say what is a

recession, it's low income purchasing in particular, consumer confidence readings at all-time lows. they loosened us into one. they just hiked again another 75 basis points yesterday >> i think at this point they're in data dependency mode. up to this point the last two or three meetings they're on autopilot trying to go from zero to what they would classify as neutral and that is a rate that's neither stimulating the economy nor restraining it right now we're probably at neutral. many members think we need to go into restrictive so have some restraint, but that's a trickier sort of question and so they're really going to be looking at all the data coming up. for me two of the most important ones will be the labor market report we'll get two more of those between now and the end of september and two more cpi inflation reports. those things will be key

and i think will really determine how the fed progresses from here. >> at the same time the jobless claims, the leading labor market indicator looks healthy still. 250,000 by historical measures is nothing to be alarmed about >> well, it's the change there that you really have to look at, and we've been trending up now for six weeks or maybe even eight weeks. in terms of the initial jobless claims but what we were looking at earlier was continuing claims, so these are people who continue to file for unemployment benefits what's interesting there is they haven't moved. they stay rock bottom low. what that's telling me about the jobs market right now people are losing their jobs but they don't continue to file because they've gone out and found another job that tells me the labor market is holding up okay at this point. >> so the economy is slowing do you think maybe the fed should take a pause here and

re-evaluate or keep going? what's the bottom line >> it will depend on the incoming data. a strong labor market report next week, next friday, that tells me the fed probably needs to keep going here and couple on top of it the inflation numbers we're going to get in mid-augment when you strip out energy because we know gasoline prices are down, if you look at the core rate of inflation, if that continues to come in pretty hot, then my sense would be the fed is going to continue to raise rates. maybe it's not 75. maybe it's 50. >> thank you for your time we'll leave it there joining us today from wells fargo. while the data has been softer lately the stock mark has undergone a dramatic valuation reset. today's report isn't bad news for the market necessarily

it's time to start buying the dips great to have you both here. david, you have had this change in tone or let's call it the last couple of weeks tell me what you want to buy now >> we think 6 to 12 months the stock market will be higher. the economic number in terms of the economy may be being in recession with the negative gdp. generally stocks go down three to six months before the economy enters a recession and they start to go up mid recession we still think you want to buy we like cisco, microsoft

they're all down a lot this year >> what if the end of the business cycle, so we don't get all the terms confused here, what if that end of the business cycle isn't actually coming until early or middle of next year >> we think the economy is slowing now. it will be a pause that refreshes and we do think it will start to enter a new growth mode we think that inflation is breaking and if that's the case the fed will be able to be less hawkish next year so we think the economy is going to be getting better and the stock market is already discounted a milder recession or moderate recession and not as bad as that or stocks go higher. >> what do you say and it's remarkable to look at the ten-year yield after a point and a half of fed tightening now in the past six weeks is down to under 2.7% that's pretty remarkable i wonder how much heavy lifting that's doing for the market right now.

>> hi, kelly yes, it does seem like it's actually working in regards to the initial rates that they've done especially the 75 basis points in june and july. with that being said their target is still 3.25% by year end which is another 100 basis points we don't necessarily think they're going to be raising rates as aggressive as they have the last two meetings, 25 to 50 basis points but is still a little too early to seeif there's going to be a recession or not we do think if there is going to be one, it will be mild as we sit today. i think there's still a lot of uncertainty out there so with that being said ubs, we're taking more of a defensive stance >> a value stance. some of that overlaps with the kinds of stocks that david is looking at but let's be clear in particular you like energy and health care. is that right? >> absolutely. we like energy and health care we like high quality, low beta,

companies that have good cash flow we like value over growth. it's shown since 1975 that if the inflation is over 3% value has outperformed growth and any business cycle to keep that in mind, also the russell 1,000 growth index is 70% comparison to the russell value index. normally about 35% which is actually what we're looking for the russell 1,000 growth to kind of come back down from valuation component. so we are very interested in value over growth in that sense. in addition to that having a liquidity strategy for clients of three to five years of cash flow makes a lot of sense because, a, you don't have to sell if the market does pull back to increase liquidity and second it gives you the opportunity to have the potential to buy at a lower level. >> david, turning back to you, and that's a lot of cash for

people to be keeping on hand some of the names you like are more big cap tech names, microsoft, cisco, how would you describe the style of the companies and investments you are looking for right now? >> so we like everything that your guest just said in terms of value being the place to be and the technology companies that we talk about are value stocks in terms of qualcomm it's at 11, 12 times earnings, cisco. we think you can buy those companies, focus on value, but now is not the time to be defensive from our perspective you had a bear market. many stocks are down 20% to 40%. so we're buying some really good growth companies but value prices and we think that will be in the sweet spot of making money in the upcoming period >> thank you both. we very much appreciate it coming up shares of royal caribbean climbing after the cruise line reported a smaller than expected loss we have the ceo on whether guests are returning and how

they're managing the debt load and we're awaiting secretary yellen's remarks we'll bring it to you live when it happens a look at the market the dow is up 300 points that's a session high. lagging up about two-thirds of a percent and the ten-year yield is 2676. ♪ ♪ it's electric... made extraordinary. ingenuity... in motion. it listens, learns, adapts and anticipates your every need. with intelligence... that feels anything but artificial. the eqs from mercedes-benz. it's the car electric has been waiting for.

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welcome back to "the exchange." janet yellen is set to speak on the economy following this morning's disappointing gdp data, and we'll bring that to you live when it happens in the meantime take a look at shares of royal caribbean. the company posting a smaller than expected loss per share beat revenue estimates, bookings for the second hatch lf of the r third quarter guidance came in light and the cruise line warned also of soaring fuel costs today royal caribbean shares are up about 6.25% they're still down more than 50% since january and have retraced to levels not seen since the early days of the pandemic let's bring in jason liberty, the ceo of royal caribbean, with

our very own seema mody. seema? >> kelly, thank you. welcome back to cnbc the good news here, revenue in the second quarter doubled what you saw in the first quarter pricing of tickets has come down is that what's driving bookings here, jason? >> what's really, if you look at our revenue environment, there's a mix between what's happening with ticket and what's happening with onboard and that's packaging in how we're coming to market what really drove it, more accelerated demand on our bookings is what drove the outperformance relative to our expectations >> your stock really popped on the comments you made on the analyst call this morning where you said you will prioritize cash to pay down debt. for those invested in rcl shares, are you telling them you will not launch a stock sale

which your competitor, carnival, did last week? >> i really said three things about how we're going to manage our capital. first we're still continuing to seek high returning investments that we make second, as we are now generating free cash flow and so forth we will be using some of that cash to pay down debt so what we're trying to signal is any type of capital raise we do is a board decision we take raising equity to a high bar for us and we don't have any plans to issue equity. we raised equity in order to support our liquidity needs during the pandemic and today we're generating positive cash flow >> free cash flow positive and positive ebitda. your take on the consumer going

into fall and winter, jason? >> sorry, i just lost the question if you can repeat the question >> i'm going to have to wrap it there. jason, thank you for your time we are going against janet yellen kelly, back to you >> jason, our thanks and apologies for having to jump in there. treasury secretary janet yellen is about to speak on the u.s. economy after this morning's disappointing gdp data a quick setup from kayla tausche. we just saw her live >> reporter: we are awaiting the treasury secretary who has been among the earliest and most honest brokers on the economy as the white house has hued closely to the message we are not in a recession but the fed might need to raise rates to tame inflation. last fall she said inflation might not go away until the end of this year and while she's already said she believes the underlying economy is strong, what we're listening for today is where she believes the economy goes from here kelly? >> are there any policy implications, kayla, any announcements here what are we really listening

for? >> reporter: we are not expecting any specific policy announcements here as you know with all of these officials we will be reading the tea leaves for anything the administration might be considering and some policies where she's already weighed in behind the scenes. >> we'll come back to you in just a moment. also with us, the founding partner of hamilton place strategies and a cnbc contributor. our steve liesman is standing by as well. welcome to all of you. dan, what's your two cents not just on the comments we're about to hear from yellen but will hear from the president twice today. we had this big development last night from manchin on the inflation reduction act. >> yes, the president's approval rating the last couple of weeks has continued to deteriorate he's below where president trump is they needed to right the course. the president has come out of covid with a strong sense of momentum he now has a chips bill that's likely to pass he now finally got senator manchin to commit to an agreement.

and the administration feels like they are getting more of an offensive march here they are goingto be weighed down by the economic data. inflation remains very high. we had two negative quarters of gdp growth we could debate whether that's a recession or not americans don't feel well about that and you are still going to have high inflation it's going to take months for that to come down. and i think they're trying to get out in front of that at these levels the president will be in for a tough mid-term election night and they're trying to get improvement with the latest developments that occurred >> and steve liesman, not that anyone in our audience needs to be reminded but janet yellen was the former fed chair are you looking, anticipating anything that she says that could be a veiled critique of fed policy, an endorsement, or do you think she will try to steer clear of that entirely >> reporter: i think she will steer clear of it, kelly the administration is in a mode now where it's letting the fed do the heavy lifting when it comes to fighting

inflation there are things the administration can be doing other than passing bills when they don't appear to be doing so >> tony, we turn to you. are we missing something in the details of this proposed legislation on the clean energy side, on the subsidy side, on the tax hikes? where do you see the inflation reduction? >> well, i don't really think about it in terms of inflation reduction. this is a bill that's going to be implemented over time, and we're dealing with inflation right now. and it's not going to come fast enough either way. she should be talking about jobs and that's what i expect >> tony, thank you here is the treasury secretary janet yellen >> it presents an opportunity for us all to take stock coming out of the dips of the pandemic the united states

experienced an historic economic recovery, a rebound that's unmatched in our nation's modern history in its speed and scale right now in the face of global head winds including a war in europe and successive variants of the pandemic our economy remains resilient. our unemployment rate is at 3.6% household finances are strong. and industrial output continues to grow. this outcome was not preordained. in january 2021 when president biden and this administration took office the unemployment rate was at 6.4% over 8,000 jobless claims were being filed and 20 million americans were receiving unemployment benefits. only 1% of americans have been fully vaccinated against

covid-19 and over 3,000 people were dying from the virus each day. by the time president biden took office our economy had been brought to a standstill. at its core a remarkable progress since then has been driven by this administration's policies particularly through fiscal support and with the vaccination effort that allowed businesses to reopen and americans to get back to work over the course of the administration created over 9 million jobs in 2021 we saw the biggest decline on record and the biggest year of economic growth in four decades. fixed investment has recovered to prepandemic trend in just two years.

in the last two recessions this never happened and during this time we also reduced the deficit by $1.5 trillion these are not abstractions they are american workers back at work, families with more financial security and businesses small and large that have been able to hire and grow. as president biden has said we've entered a new phase in our recovery focused on achieving steady, stable growth without sacrificing the gains of the last 18 months we know there are challenges ahead of us. inflation remains unacceptably high and it's this administration's top priority to bring it down. we know how difficult higher prices can be for families, how they can squeeze a household

budget and how challenging the past two years of disruption caused by covid-19 have been and that's why this administration mounted an historic vaccination campaign to get the pandemic under control and why we're laser focused on bringing down prices the same factors in places like canada, the united king done and the eurozone are hurting americans as well. these challenges include vladimir putin's illegal and shameful war in ukraine. more than half the inflation experienced in 2022 reflects rising food and energy costs, global fallout from russia's invasion and it reflects the lingering impact of the pandemic

particularly in china where repeated lockdowns have brought their economy to a halt. the federal reserve has the primary role in bringing down inflation. the president and i are committed to taking action to drive down costs and protect americans from the global pressures we face including the president's historic release of 1 million barrels a day from the strategic petroleum reserve. which helped reduce the price of gas by between 17 and 42 cents per gallon according to a treasury analysis this week. americans in the last few weeks have seen prices decline by over 60 cents a gallon in total our efforts include the work we've done to a cap on the price of russian oil, a way to ensure

a steady flow of oil onto the global market while denying putin revenue for his military at a time of global anxiety over high prices, a price cap on russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs. the reconciliation package announced yesterday will also help ease inflationary pressures by lowering some of the biggest costs families face including energy, health care and prescription drugs all while making historic investments in fighting climate change and reducing the deficit this bill will help us have the resources we need to ensure wealthy americans are not able to avoid paying the taxes they

owe. these efforts are long overdue and congress should pass it immediately. this context including the successes for the last year and the global challenges we face is critical in understanding today's gdp data most economists and most americans have a similar definition of recession. substantial job losses and mass layoffs, businesses shutting down private sector activity slowing considerably family budgets under immense strain in some a broad based weakening of our economy that is not what we're seeing right now when you look at the economy. job creation is continuing household finances remain strong consumers are spending and businesses are growing one example in the last three

months our economy is has created over 3.1 million jobs. each modern recession outside of the pandemic our economy lost 240,000 jobs on average. spending by businesses and consumers the core of our economic activity rose by 3% in the first quarter of the year and continued to expand in the second industrial output, strong average growth over the first half of the year compared to sharp average declines in past recessions in the context of today's report it's important to look beyond the headline number. to understand what's happening the contraction in gdp was

driven primarily by the change in private inventories, a violent component of gdp which subtracted over two percentage points off quarterly growth. today's report shows continued expansion in consumer spending overall and in services in particular in addition to notable strength in net exports. overall with the slowdown in private demand this report indicates an economy that is transitioning to more steady, sustainable growth this path is consistent with one that eases inflationary pressures while maintaining the labor market progress of the past 18 months while our economy has been resilient in the face of numerous shocks over the past two years i should also stress that there are numerous risks on the horizon. many of them global that we

remain highly attune to. they include the outcome of the war in ukraine, covid lockdowns in china and pandemic-related supply chain snarls. these factors make predicting the future difficult and we must be clear-eyed and vigilant about the threats they pose. we cannot lose sight of the remarkable progress we have made from the depths of the pandemic and the tremendous resilience our economy has shown thanks to the hard work and perseverance of american work ers families, businesses and effective policy. this gives us a chance to confront the challenges ahead of us and i believe in the months to come with skill and luck it's possible to maintain that strength particularly in the labor market while easing the tightness that has driven

inflation. with that i would be happy to take your questions. >> hi, thank you, secretary. regardless whether we are in a recession, and you seem to be indicating not, many americans are feeling some pain right now. the last time we had to tame inflation at this level was the early 1980s, and it took two years to do that do you anticipate this fight will be a long and grinding one like the early '80s or will it be faster? and do we need to see some job losses in order to bring that inflation rate down? thank you. >> with respect to how americans are feeling about the economy, they are experiencing great stress from high inflation

we haven't seen anything like this since the 1970s and seeing what's happening to food prices and energy prices and rent and other prices in the economy is making families very concerned about their household budgets. they want to see it end. this is pressure we recognize and it's the president's top priority to bring inflation down i think the key job here is the federal reserve is moving to address that and have indicated their commitment to bring it down this is a very unusual situation in that coming out of the

pandemic we have a set of supply chain challenges that affect the economy. an example being the ongoing shortage of semiconductors holding back production of vehicles and it's hard to know just what the time frame is for those supply chain pressures to resolve and to ease. i think there are some positive signs that we are seeing that suggest inflation is likely to come down in the days ahead. the proof in the pudding will be in the eating. the fed is taking the right measures very important supplementary measures as i mentioned the releases from the strategic petroleum reserve that have been one factor working to bring down gas prices

and the legislation that will make an enormous difference to prescription drug prices and hold health care costs down. the investments in energy and to address climate change will over time improve greatly our sense of security about energy and make us much less vulnerable to global shocks and we're working with our allies on the price cap to avoid further upward pressure on oil and gas prices. >> thank you very much chris condon from bloomberg news i would like to follow up on david's question by asking you specifically do you think it will be necessary for unemployment to rise above 5% in order for inflation to reach the

fed's longer run target of 2%? thank you. >> well, i believe, as i've said, that there is a path to bring down inflation while maintaining a strong labor market and most estimates of the natural rate of unemployment are lower than 5%. now it's not a certainty that can be done but i believe there is a path to accomplishing that and as chair powell has said rep repeatedly that would be his objective to try to accomplish that and i would consider that a good outcome as well clearly we are seeing a slowing in the economy and in demand that's appropriate and necessary to transition from rapid growth

and recovery from a serious shortfall to now, a very strong labor market we need to see a slowdown in growth we are seeing that i do believe there's a path by which we maintain a strong labor market like that >> with "the wall street journal. madam secretary, could you say more about how you b inflation how much do you believe that package would subtract from inflation and over what time frame? >> i don't have numerical estimates for you. but i see that as making a very important contribution to lowering the cost of prescription drugs which is for many households a very severe

burden on their household budgets this is something that policymakers and members of congress who have sought to accomplish for many, many years and it's a great achievement if it can become law and will certainly help and with respect to health care premiums the funding that's provided there is going to be important in holding down health insurance costs for many americans so these are two important contributions that we should see come into play as soon as the legislation is passed and put into effect. beyond that there is deficit reduction in the bill and over time i see deficit reduction as an appropriate accompaniment to

the policy changes the fed is putting into effect. >> secretary yellen, in today's gdp report we saw very high nominal gdp growth how does that high high level of growth jive with the idea that the economy is slowing and does it suggest that the economy's going to have to slow down at an even more aggressive pace in order to get back to 2% inflation? >> well, i mean, we had high nominal gdp growth because inflation is high ask nd that sw up in the gdp deflator real growth was reported in this advanced report as a negative number and that's a better metric to look at in assessing the overall performance of the economy. so i see the last several

quarters as exhibiting a significant slowdown in the pace of spending in the economy and when you look at the details in terms of spending components, we're in a period where there's very significant fiscal drag government spending made a negative contribution to gdp we saw negative contributions this quarter, huge from inventories and importantly, consumer spending remains positive, but definitely the real data to my mind show that there is -- that there is a slowdown in progress and you know, the labor market right now is extremely tight and maybe the source of some of the inflationary pressures, certainly not all of it by any

means food and energy are a very important contributor. supply chain problems relating to the pandemic and what's happening in china, those are important, but we've got two job vacancies for every unemployed person which is a level of tightness in the labor market that we really, i don't think, have ever seen historically, and the slowdown in the economy cou coupled, hopefully, with a restoration in labor force participation. we're not sure if that will occur, but beginning to take some of the tightness out of the labor market while maintaining overall a strong market i think that's a plan to bring down inflation. >> thank you so much, madam secretary, kayla tausche from cnbc is there such a thing as a mild

or partial recession as some have suggested, and if so what would that look like second, are you committed to staying in this role until growth and inflation stabilize >> i will stay in this role as long as president biden finds my contributions to be useful i serve at his pleasure, and i'm sorry -- what was the first part of the question was -- >> a mild recession. >> sure. recessions are different and we had an extremely severe recession following the global financial crisis when unemployment rose to around 10%, and it took a decade for the economy to get back to full employment we've had milder recessions certainly than that. there's usually been a

significant increase in the unemployment rate, but they do differ and you know, there is a very unusual situation where we have a slowdown and the labor market remains very tight. we could see some mild easing of pressures in the labor market and yet continue to feel we've got a good, strong labor market that's operating in full employment >> secretary yellen, from axios. there's been a run up in the there are in the last few months and that's especially hard on the e memerging markets, do you feel it's appropriate? do you feel it's gone too far and do you worry about feedback loops and negative effects on the global economy >> well, thanks for that question there certainly has been a significant depreciation of the

dollar i think part of it is driven by interest rate differentials between the united states and other countries as we've moved to tighten monetary policy more quickly. it's attracted capital inflows that have pushed up the dollar and that's typically something that occurs in cycles of monetary policy tightening i think we've also seen some risk off safe haven-type flows into the dollar that have exacerbated that you know, i am worried about the global outlook, the imf and world bank have on several occasions now downgraded the outlook. the strong dollar creates for some of those countries, pressures on their economies especially when there's

dollar-denominated debt that becomes harder to pay off. so a rising interest rate, a strong dollar environment can create pressures in other parts of the world especially at a time when all of us are suffering from the impacts of putin's war that are driving up energy and food prices and creating real burdens on most countries around the world and particularly the lowest income countries, we are seeing more countries that are likely to experience that distress so this is a stressful environment for many countries around the world some countries are benefiting from higher commodity prices, so it's an offset and it differs, but i don't -- you asked about reinforcing cycles, and i don't

see that occurring at this point. i don't see that kind of distress developing anywhere that i'm aware of. >> thank you jeff stein with "the washington post." the polling shows that most americans feel like we're in a recession. why have this drawn-out semantic battle the administration has been on the fence to define a recession. why have this semantic battle especially when so many americans feel like they were misled last year especially given that things could again change and we could have a recession by the definition that you're outlining why has this become this battle? >> so i agree with you, and i agree that we should avoid a semiapa s semantic battle. i've tried to do that in my remarks today. when you say americans are very

concerned about the economy. i think their biggest concern is with inflation and high prices that they feel they can't afford to put gas in their gas tank and people are worried about their retirement savings and whether or not they'll have enough to retire sometimes people use the word recession to refer to that that's really about inflation, but i think that the discomfort that has the feel, and it's not because of the job market. jobs are readily available and most americans feel good about their employment prospects layoffs have been low. some may worry that the economy -- that the labor market will weaken, but i think the biggest burden that's weighing negatively on household sentiment is inflation and that's why that is our top

priority in terms of addressing that i -- you know -- when you look at the economy, the official arbiter of what is a recession is going to be the national bureau of economic research. they'll decide at some time in the future pi think what we can constructively do is talk about what is the state of the economy? as i tried to describe the labor market remains exceptionally strong that is not what we see in past epi episodes mbar has labeled recession. on the other hand we see a sledown in growth and that is to be expected given how rapidly the economy grew when it was recovering from the pandemic and all of those job losses and policy was designed to do that

we should expect to see a slowdown this economy is at full employment so we have a slowing economy and a whole variety of risks to the outlook that i've tried to enumerate, but we have great strengths in the economy, too. a strong labor market being one strength and consumer household balance sheets remain generally quite strong credit quality is strong you do not see some increase, a significant increase in bankruptcies and the typical kinds of distress we associated with the word "recession," but i agree we shouldn't just get involved in the semantics and let's talk about what's going on thank you. all right. well there was secretary of the treasury janet yellen speaking about the state of the economy