US Treasury Secretary Yellen continues to praise the US economy, believing that a soft landing has been achieved, inflation continues to slow down, and there are no signs of a significant economic downturn.

On Friday, January 5th Eastern Time, Yellen told the media, "I think what we are seeing now can be called a soft landing, and I hope this situation can continue

When evaluating the economy, Yellen mentioned that wages are now rising faster than prices, "American workers are making progress, and the progress of middle-income families is very evident

Yellen said that some surveys are beginning to show that the American people are becoming more optimistic. People need to go through a period of sustained low inflation and wage increases in order to be 'satisfied with their future prospects'.

On the day of Yellen's speech, the heavyweight non farm payroll report released on Friday showed that the number of new non farm payroll jobs added in the United States in December far exceeded Wall Street's expectations, increasing by 45000 more than expected. The unemployment rate remained the same as 3.7% in November, lower than the expected 3.9%; Salary growth exceeded expectations, with the year-on-year average hourly wage growth rate accelerating from 4% in November to 4.1%, which did not slow down to 3.9% as expected by the market.

Although the non farm payroll report reflects that the labor market remains robust, the released US ISM report has brought some bad economic news. The ISM non manufacturing index fell unexpectedly in December, dropping from 52.7 in November to 50.6, marking the largest month on month decline in nine months. Analysts' expectations only slightly decreased to 52.5, reflecting a slowdown in the expansion of service industry enterprises, the main contributor to GDP, beyond expectations. The employment sub index of non manufacturing industries in December fell to 43.3, hitting a new low since July 2020, signaling a cooling of the labor market.

Yellen did not comment on the data on Friday and declined to comment on how she believes the Federal Reserve should act. Instead, she said that the Fed's previous handling of monetary policy was good.

Yellen said, "The trends in the labor market, economy, and inflation indicate that they (the Federal Reserve) have made a series of correct decisions

Media comments suggest that in recent weeks, Yellen seems to have embarked on the path of asserting a successful soft landing. Wall Street previously mentioned that more than three weeks ago, Yellen's statement indicated that she believed the US economy was heading towards a "soft landing".

At that time, Yellen said that the United States was on track for sustained inflation decline, but the economy would not slow down significantly, thus achieving a so-called soft landing.

Earlier in 2023, a media survey showed that economists unanimously believed that the US economy would fall into recession, but these expectations gradually diminished thereafter.

Yellen said last month that inflation is falling towards the 2% target of the Federal Reserve, and that achieving the final inflation target will not cause pain to Americans.

She said that inflation "will definitely decrease significantly, and I believe that on the path we are currently on, there is no reason why inflation should not gradually decline to a level that is in line with the Fed's mission and goals. Personally, I believe there is no sufficient reason to think that the last mile will be particularly difficult

When asked if the Federal Reserve would cut interest rates and lower policy rates that have reached a 20-year high, Yellen declined to comment. But she said that a decrease in inflation means that even if the Federal Reserve maintains nominal interest rates stable, real interest rates adjusted for inflation tend to rise. In a sense, this will lead to monetary tightening, and therefore, it is a factor that may affect the Federal Reserve's interest rate decisions.