Yellen feels 'good' about US economy being on right track

Treasury Secretary's trip part of broader push by Biden administration to promote economic achievements

US Treasury Secretary Janet Yellen at the International Brotherhood of Electrical Workers union hall in Las Vegas, Nevada, on August 14. Bloomberg

Treasury Secretary Janet Yellen on Monday said she believed the US economy was on the "right track" given challenges abroad, lingering inflation and diversifying supply chains for clean energy.

Ms Yellen said China's slowdown and the Russian war on Ukraine could affect the US, but she continued to "feel good about US prospects overall".

Fears of an economic downturn have largely abated this year. The labour market remains resilient with low unemployment, the US economy grew 2.4 per cent in the second quarter and headline inflation is at 3.3 per cent.

Consumer sentiment is also at a two-year high. But there are some concerns, notably with wage growth above inflation.

"I still believe that there is a path to continue reducing inflation while maintaining a healthy labour market," Ms Yellen said.

“The continued strength of our labour market is particularly impressive given our fight against inflation."

Her remarks are part of a broader push by the White House to celebrate the Inflation Reduction Act.

Signed into law last year, the IRA set aside hundreds of billions of dollars to promote clean energy, lower prescription drug prices and address healthcare policies.

"It’s our nation’s boldest-ever climate action and it is beginning to spark an economic renaissance in communities that had been left behind," Ms Yellen said.

The IRA remains one of US President Joe Biden's most significant legislative achievements but many Americans still disapprove of his handling of the economy.

Ms Yellen said the IRA "is helping reshore some of the production that is critical to our clean energy economy".

She said diversification for clean energy would help with economic security.

“Today, the production of critical clean energy inputs – from batteries to solar panels to critical minerals – is concentrated in a handful of countries,” she told an event in Las Vegas, Nevada.

China is the leading global supplier of clean-energy technology and a vast net exporter, according to a report from the International Energy Agency.

China has at least 60 per cent of manufacturing capacity for technology such as solar PV, wind systems and batteries, the report found.

Ms Yellen also spoke about US domestic investment in clean energy and how Washington is working with other countries to develop the transition from fossil fuels to clean energy.

With the 2024 presidential election in focus, she and senior officials are touring the country to mark the legislation's achievements.

Mr Biden will speak on investing in the US during an event in Wisconsin on Tuesday before delivering remarks on the law's anniversary on Wednesday.

Mr Biden last week expressed regret on how he named the legislation.

“I wish I hadn’t called it that because it has less to do with inflation than it has to do with providing alternatives that generate economic growth,” he said during a fund-raising dinner in Utah.

Transport Secretary Pete Buttigieg, acting Labour Secretary Julie Su and other officials will promote advances made under the legislation.