Treasury’s Wally Adeyemo says Biden administration is doing everything it can to combat inflation and recession

Deputy Treasury Secretary Wally Adeyemo said Wednesday that the Biden administration is doing everything it can to combat inflation avoid a recession.

Adeyemo blamed the twin shocks of the Covid-19 pandemic and the war in Ukraine for record inflation rates in the U.S., but said the American economy is still strong despite the threat of an economic downturn.

“Consumer confidence is still high. Consumer and corporate balance sheets are healthy. We have a great deal of momentum in the labor market in which we get more than 300,000 jobs over the last three months on average,” Adeyemo told CNBC’s Ylan Mui at the Delivering Alpha Investing Summit in New York City.

He added that the administration is working to bring down inflation through a series of measures outlined in the Inflation Reduction Act, the CHIPS Act and the bipartisan infrastructure law.

“All three are going to help expand the productive capacity of the U.S. economy which will mean that while we’re bringing down inflation, we’re also expanding supply in the economy,” Adeyemo said. “That will give us the ability to make sure that we have sustainable growth as we come out of this high inflation period.”

Republicans have criticized the administration’s spending, saying it will increase the U.S. deficit as interest rates rise.

“Not all spending is the same,” Adeyemo said. “The spending (in the) Inflation Reduction Act is spent over time, and it’s spending that’s going to help expand the productive capacity of the economy,” he said.

He said investments that make the economy more productive, will lead to “better growth outcomes over time.”