U.S. Treasury Secretary Janet Yellen speaks during a news conference in Philadelphia, on July 30.Matt Rourke/The Associated Press
Treasury Secretary Janet Yellen is telling world financial leaders that the U.S. economy has grown stronger because the Biden administration rejected isolationism, offering a barely veiled criticism of former president Donald Trump’s policies two weeks before the U.S. election.
Ms. Yellen was opening the IMF and World Bank annual meetings Tuesday by highlighting U.S. economic growth since the nation was in the grips of the COVID-19 pandemic. Without mentioning Mr. Trump by name, she said in an advance draft of her remarks that the Biden administration had ended a period of international isolationism that “made America and the world worse off.”
“We went from millions having lost their jobs to a historic labour market recovery,” Ms. Yellen said. She said U.S. economic growth has been “almost twice as fast as most other advanced economies this year and last, even as inflation came down sooner.”
The IMF released its international outlook on the global economy on Tuesday morning and upgraded its economic outlook for the United States this year while lowering its expectations for growth in Europe and China.
The IMF expects the U.S. economy – the world’s largest – to expand 2.8 per cent this year, down slightly from 2.9 per cent in 2023 but an improvement on the 2.6 per cent it had forecast for 2024 back in July. Growth in the United States has been led by strong consumer spending, fuelled by healthy gains in inflation-adjusted wages.
The meetings mark the last major international finance gathering held during the Biden administration and come as economic issues are a top concern for American voters. Republicans have blamed the Biden-Harris administration for inflation that reached a 40-year high before dropping. Trump campaign press secretary Karoline Leavitt said in a statement that the Biden-Harris administration “created an inflation crisis, record-high gas prices, skyrocketing mortgage and interest rates resulting in the lowest consumer and small business confidence in decades.”
Voters remain largely divided over whether they prefer the Republican nominee, Mr. Trump, or Democratic nominee Vice-President Kamala Harris to handle key economic issues, according to an October survey by the Associated Press-NORC Center for Public Affairs Research.
Who wins the U.S. election will also have enormous impacts on global finance and the world’s economy.
Mr. Trump and Ms. Harris have spoken little about their plans for the International Monetary Fund and the World Bank. But they have differing views on trade, tariffs and other economic issues. Mr. Trump has been skeptical of world financial bodies and is promising heavy tariffs if elected. Ms. Harris is more likely to continue the Biden administration approach favouring international co-operation over threats, though she has supported some tariffs.
Ms. Yellen, like other federal officials, is barred from partisan political activity by the Hatch Act and chose her words carefully in her speech. But she praised Biden-Harris initiatives on climate, health care, infrastructure spending and other areas.
She alluded to Mr. Trump’s international leadership saying: “From day one, we rejected isolationism that made America and the world worse off and pursued global economic leadership that supports economies around the world and brings significant benefits to the American people and the U.S. economy.”
Mr. Trump, who has embraced isolationism and criticized multilateral institutions, promises as president to impose a 60-per-cent tariff on all Chinese goods and a “universal” tariff of 10 per cent or 20 per cent on everything else that enters the United States, insisting that the cost of taxing imported goods is absorbed by the foreign countries that produce those goods.
Mainstream economists say that would amount to a tax on American consumers that would make the economy less efficient and send inflation surging in the United States.
The Biden-Harris administration has not eliminated tariffs imposed on China during the Trump administration and in May also slapped major tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment.