By Andrea Shalal
WASHINGTON (Reuters) -The U.S. economy appears headed for a soft landing, with recent economic data pointing to an ongoing recovery, not a recession, White House economist Heather Boushey told Reuters on Friday.
Boushey welcomed Friday's data showing the U.S. economy adding jobs at a solid clip in December, with the unemployment rate dropping to a pre-pandemic low of 3.5%, and said the biggest economic challenge now was persistent tightness in labor supply.
Asked whether the United States could avoid a recession, Boushey, a member of the White House Council of Economic Advisers, said, "There are no indications that that is where we are now."
"The steps have been taken and it looks like we are in a very good position to have that soft landing that everyone is talking about," she said.
A soft landing is the ideal Federal Reserve policy goal after raising interest rates, a situation in which inflation slows but there are not enough job losses to trigger a recession.
Other challenges include the impact of the war in Ukraine on energy prices and ongoing COVID-19 risks, especially with China's shifting away from its zero-COVID policy, Boushey said.
Boushey said she also worried that challenges finding affordable care for children, the elderly and the disabled were still keeping workers out of the labor force.
President Joe Biden had hoped to enact reforms to fund universal preschool and ensure improvements to the "care economy," but failed to win sufficient support in Congress. Prospects have dimmed further given the divided Congress, but Boushey said Biden would continue to push for progress.
"We continue to see there is a crisis of care that is holding back labor force participation for both men and women," she said, adding that U.S. rates were "quite low" relative to other advanced economies.
"It is an important issue," she said. "If you care about getting more people into the labor force, this is exactly where we need to focus our attention."
Still, supply chain issues driving inflation higher have been addressed and prices looked likely to continue to ease, she said.
"The data that keeps coming out month after month shows that we continue to move forward. The evidence is not consistent with what a recession typically looks like," she said. "The signs all point to ongoing recovery and robustness in the labor market."