Inflation stood at 8.3% in August, two tenths less than in July, according to data released Tuesday by the Bureau of Labor Statistics (BLS). The decline was less than expected. Although fuel prices fell 10.6%, continued increases in food, rents, medical services and vehicle costs prevented inflation from moderating more solidly.
As a result, core inflation - the calculation of the consumer price index excluding food and energy - continues to rise. This stood at 6.3% in August, four tenths of a percentage point higher than in July. For its part, the food price index has continued to rise with an increase of 0.8% in the last month.
The White House recognizes a "risk of recession.”
Treasury Secretary Janet Yellen acknowledged for the first time this week that the country faces "a risk" of recession as its fight against inflation could slow the country's economy. The official explained on CNN:
A recession in the United States is a risk when the Federal Reserve (Fed) tightens its monetary policy in the face of inflation. So it is certainly a risk that we are monitoring, but we have a strong labor market, and I think it is possible to keep it that way.
"Inflation is too high and it is essential to reduce it. I think there is a way to get there. In the long run, we cannot have a strong labor market without inflation under control," Yellen said.
Yellen's statements come after the Gross Domestic Product (GDP) shrunk in the first two quarters of 2022, which corresponds to the classic definition of a recession. However, the Treasury Secretary insisted that this is not the case: "We are not in a recession. The labor market is exceptionally strong. There are almost two job openings for every worker looking for work."
Therefore, according to the traditional definition, the United States is already in recession. The Biden Administration has wanted to avoid the political effect of that word, possibly because of the effects it may cause a few months before the November elections.