Former U.S. Treasury Secretary Steve Mnuchin has weighed in on the recession debate, stating that he believes the United States is already in the midst of an economic downturn that will continue for the next two years.
Speaking at Saudi Arabia’s Future Investment Initiative (FII) conference in Riyadh on Wednesday, Mnuchin, who served under President Donald Trump's administration from 2017 to 2021, said he expects 10-year Treasury yields, the most followed benchmark for interest rates, to peak at 4.5 percent.
"But you’re going to begin to see that tightening relatively regularly," he added, referencing the Central Bank's monetary policy. "And I think people are overestimating the Federal Reserve’s actions just as they underestimated it."
China's Slowdown Will Impact World Economy"Clearly China is going to have a significant slowdown and that will have an impact on the world economy," said Mnuchin. "Things are going to get worse before they get better."
The former treasury secretary, who is now managing partner at the private equity investment firm, Liberty Strategic Capital, also said he believes that economic issues in the Middle East should be dealt with regionally.
Numerous experts have in recent months stated that the United States is in a recession after the economy contracted for two consecutive quarters this year. The Biden administration has continued to insist that the economy is strong enough to avoid one.
Mnuchin's comments differ from those of Secretary of the Treasury Janet Yellen, who on Monday said she expects inflationary pressures to ease "over the next year or two," although she stressed that she is "not positive" that cost of living crisis will not get worse before it gets better.
"I have confidence that inflation will come down over the next year or two, so I believe that what [the Federal Reserve is] doing will work," she added.