WASHINGTON: US economic growth and wage gains should “serve as a source of resilience” moving forward even if the economy continues to cool, Treasury Secretary Janet Yellen said in remarks released Friday.

“I still believe that there is a path to continue reducing inflation while maintaining a healthy labor market,” she said, in excerpts of a speech to be delivered in Nevada next week.

“While there are risks, the evidence we’ve seen so far suggests that we are on such a path,” Yellen added. The world’s biggest economy has defied expectations of a slowdown, picking up pace in the second quarter of the year, supported by business investment and consumer spending. Its labor market has remained robust as well. The strength comes despite policymakers’ efforts to ease demand and rein in inflation, fueling hope that the central bank’s aggressive campaign of interest rate hikes will lower price increases without triggering a major recession.

Yellen noted in prepared remarks that annual inflation is now nearly six percentage points below its 9.1 percent peak in June 2022, while the economy continues to expand. Real average hourly earnings have increased over the past year as well, reversing some wage inequality that has accumulated in recent decades, she added. “I expect the important gains that we’ve made over the past two and a half years to serve as a source of resilience in the weeks and months to come, even if we see further cooling in our economy,” Yellen said.

In July, consumer inflation inched up for the first time in around a year, keeping pressure on the central bank as officials mull further interest rate hikes. But the inflation figure remains moderate compared with last year’s numbers.

Meanwhile, US wholesale prices picked up in July on a surge in services costs, according to government data released Friday, although the overall inflation figure remains muted. The bigger-than-expected rise in the July producer price index (PPI) indicates that services prices are still buoyant, even as increases in the cost of goods are tepid.

Wholesale prices rose by 0.3 percent from June to July, after a flat reading in the month before, according to Friday’s Labor Department data. “PPI inflation surprised to the upside in July,” High Frequency Economics’ chief US economist Rubeela Farooqi wrote in a note to clients.

But headline producer prices are well below two percent, she said, adding that annual changes in measures of underlying inflation are also moving towards target. Economists surveyed by MarketWatch had expected a slightly lower headline figure of 0.2 percent.

Services prices rose by 0.5 percent from June to July, the largest monthly increase since August 2022, fueled by a jump in trade services as well as in transportation and warehousing services. Meanwhile, goods prices ticked up 0.1 percent from a month earlier, much of it attributable to a rise in the cost of food. The Federal Reserve is weighing the prospect of another rate hike in September to reduce inflation. While producer prices have come down rapidly since last year, progress has been slower in consumer inflation. Many analysts and traders currently expect the Fed to hold rates steady at its next decision, as the effect of existing hikes filter through into the broader economy. — AFP