Janet Yellen: Tariffs Could Lead to a ‘Significant Recession’

KERNEN I was just ░░░░░░░░ to say last time ░░░░░░░░ obviously was not transitory ░░░░░░░░ was deep seated it ░░░░░░░░ maybe I don t ░░░░░░░░ money supply however you ░░░░░░░░ to look at it ░░░░░░░░ spending that was the ░░░░░░░░ of not transitory when ░░░░░░░░ called it transitory This ░░░░░░░░ since it would be ░░░░░░░░ there wasn t a ░░░░░░░░ war it s a ░░░░░░░░ time increase si you ░░░░░░░░ t the second derivative ░░░░░░░░ t affected where inflation ░░░░░░░░ every year not just ░░░░░░░░ time It just seems ░░░░░░░░ this would be the ░░░░░░░░ of transitory especially with ░░░░░░░░ prices coming down below ░░░░░░░░ I mean this is ░░░░░░░░ time to use the ░░░░░░░░ word not the last ░░░░░░░░ JELLEN Well a lot ░░░░░░░░ what happened the last ░░░░░░░░ was also one shot ░░░░░░░░ the transitory suggests a ░░░░░░░░ of weeks and months ░░░░░░░░ it clearly wasn t ░░░░░░░░ And this time it ░░░░░░░░ be longer as well ░░░░░░░░ really key question has ░░░░░░░░ do with inflation expectations ░░░░░░░░ whether or not there ░░░░░░░░ be second round effects ░░░░░░░░ prices go up And ░░░░░░░░ think they will go ░░░░░░░░ very noticeably Just think ░░░░░░░░ autos There s going ░░░░░░░░ be sticker shock in ░░░░░░░░ showrooms quite soon I ░░░░░░░░ And many prices are ░░░░░░░░ to go up if ░░░░░░░░ tariffs aren t unwound ░░░░░░░░ ve seen in the ░░░░░░░░ recent consumer surveys a ░░░░░░░░ in inflation expectations Now ░░░░░░░░ is not necessarily meaningful ░░░░░░░░ don t usually set ░░░░░░░░ so it s not ░░░░░░░░ that inflation expectations have ░░░░░░░░ up But it s ░░░░░░░░ the Fed will have ░░░░░░░░ watch closely and worry ░░░░░░░░ So especially given the ░░░░░░░░ we ve had of ░░░░░░░░ and not being quite ░░░░░░░░ to normal the Fed ░░░░░░░░ think will be reluctant ░░░░░░░░ cut rates But recession ░░░░░░░░ have gone way up ░░░░░░░░ wouldn t want to ░░░░░░░░ so far as to ░░░░░░░░ a recession But look ░░░░░░░░ suggest that the impact ░░░░░░░░ these whole tariffs if ░░░░░░░░ stay where they are ░░░░░░░░ consumers could be in ░░░░░░░░ region of 4 000 ░░░░░░░░ that is a big ░░░░░░░░ to household income that ░░░░░░░░ lead to less consumer ░░░░░░░░ on a wide range ░░░░░░░░ goods And the uncertainty ░░░░░░░░ businesses face is likely ░░░░░░░░ have a marked negative ░░░░░░░░ on investment spending And ░░░░░░░░ collapse in spending or ░░░░░░░░ decline in consumer and ░░░░░░░░ spending can really be ░░░░░░░░ for significant recession.”