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There’s ‘More Distress’ in Low-Income Households, But Households ‘Generally’ in ‘Very Good’ Shape

In an interview with CNBC published Monday, Treasury Secretary Janet Yellen said that “some low-income consumers have probably exhausted their savings buffers.”[s] On top of what they’ve been accumulating during the pandemic, we’re seeing a trickle of suffering at the household level. However, despite this, “our economy is good and strong,” “very strong domestic demand” is “on a solid trajectory,” and “generally, households are in a very good financial position.”

“I think you’re just wondering whether the economy will continue to hold up no matter what happens at the Fed,” CNBC host Sarah Eisen said.

“I think our economy is good and strong,” Yellen responded. There is very strong domestic demand. Consumers are holding on.Some low-income consumers may be depleting their savings buffers[s] We’re seeing a gradual increase in distress at the household level on top of what they’ve accumulated during the pandemic. However, in general, the economic situation of the household is very good. Our financial system is generally very strong. I’m not — things can always happen. Recession risk is always present. Geopolitical developments can pose risks to the economy. But I think our economy is good, strong, and on a solid trajectory. ”

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