Treasury Sanctions Elites and Companies in Economic Sectors that Generate Substantial Revenue for the Russian Regime

New Designations Tighten Global Vise on Putin Associates and Resources

WASHINGTON –– Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed a new round of sanctions targeting Kremlin-connected elites, a major multinational company, and a sanctions evasion operation, as well as one yacht pursuant to Executive Order (E.O.) 14024. These elites and businesses operate in economic sectors that generate substantial revenue for the Russian regime, including from sources outside of Russia.

OFAC’s designations today were taken in tandem with the U.S. Department of State, which imposed additional sanctions on entities and individuals, as well as visa restrictions. Together, the State and Treasury actions impose severe costs for those who support President Vladimir Putin’s war.

“As innocent people suffer from Russia’s illegal war of aggression, Putin’s allies have enriched themselves and funded opulent lifestyles,” said Secretary of the Treasury Janet L. Yellen. “The Treasury Department will use every tool at our disposal to make sure that Russian elites and the Kremlin’s enablers are held accountable for their complicity in a war that has cost countless lives. Together with our allies, the United States will also continue to choke off revenue and equipment underpinning Russia’s unprovoked war in Ukraine.”

Elites Close to The Kremlin

Andrey Grigoryevich Guryev (A.G. Guryev) is a known close associate of Russian Federation President Vladimir Putin and previously served in the Government of the Russian Federation; he was appointed to the Federation Council of the Federal Assembly of the Russian Federation in 2001, where he served until 2013. A.G. Guryev owns the Witanhurst estate, which is the second-largest estate in London after Buckingham Palace.

A.G. Guryev is the founder and former Deputy Chairman of PhosAgro, a leading Russian chemical company. A.G. Guryev was designated pursuant to E.O. 14024 for operating or having operated in the accounting sector and the management consulting sector of the Russian Federation economy. A.G. Guryev has also been sanctioned by the United Kingdom. OFAC has issued FAQ 1075 to clarify that PhosAgro is not designated or otherwise blocked, and to highlight the authorization for transactions related to fertilizer and other agricultural commodities in General License (GL) 6B.

Today, OFAC also identified Alfa Nero, a Cayman Islands flagged yacht that A.G. Guryev reportedly bought for $120 million in 2014, as blocked property of A.G. Guryev. Alfa Nero has reportedly shut off its location tracking hardware in order to avoid seizure.

Andrey Andreevich Guryev (A.A. Guryev), A.G. Guryev’s son, was designated today pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy. A.A. Guryev has also been sanctioned by Australia, Canada, the European Union, Switzerland, and the UK. He was formerly the CEO of PhosAgro.  A.A. Guryev is the 100 percent owner of Dzhi AI Invest OOO (DAI), an investment entity located in Russia. DAI’s activities include deposit banking, insurance, and financial services. DAI was designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.

Viktor Filippovich Rashnikov (Rashnikov) is a Russian Federation national and businessman who is the majority owner and chairman of the Board of Directors of Publichnoe Aktsionernoe Obschestvo Magnitogorskiy Metallurgicheskiy Kombinat (MMK). Located in Magnitogorsk, Russia, MMK is one of the world’s largest steel producers. MMK operates a large steel-producing complex encompassing the entire production chain, from the preparation of iron ore to downstream processing of rolled steel. MMK is one of Russia’s largest taxpayers, providing a substantial source of revenue to the Government of the Russian Federation. MMK and Rashnikov were designated today pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy. Rashnikov has also been sanctioned by Australia, Canada, the EU, Switzerland, and the UK.

OFAC also designated Investitsionnaya Kompaniya MMK-FINANS (MMK-FINANS) and MMK Metalurji Sanayi Ticaret Ve Liman Isletmeciligi Anonim Sirketi (MMK Metalurji), two subsidiaries of MMK. MMK-FINANS is an investment company located in Magnitogorsk, Russia, that provides a wide array of investment, financial, and consulting services for the stock market both for individuals and legal entities, including its main client, MMK. MMK Metalurji is a Turkey-based subsidiary that manufactures steel products. MMK Metalurji operates and owns two steel facilities in Turkey, as well as a seaport that is located in Hatay, Dortyol, Turkey. MMK-FINANS was designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy. MMK Metalurji was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, MMK, a person whose property and interests in property are blocked pursuant to E.O. 14024.

In conjunction with these actions, Treasury has issued a Russia-related GL 47, authorizing transactions ordinarily incident and necessary to wind down any transaction involving MMK or any entity in which MMK owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m. eastern daylight time, September 1, 2022, and Russia-related GL 48, authorizing the divestment or transfer of MMK debt or equity and wind down of related derivative contracts through 12:01 a.m. eastern daylight time, October 3, 2022. OFAC has also issued Russia-related GL 49, authorizing transactions ordinarily incident and necessary to wind down any transaction involving MMK Metalurji or any entity in which MMK Metalurji owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m. eastern standard time, January 31, 2023.

Russia’s Elites

Alina Maratovna Kabaeva (Kabaeva) is a former member of the State Duma. Kabaeva was designated today pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of the Government of the Russian Federation. Kabaeva has a close relationship to Putin and is the current head of the National Media Group, a pro-Kremlin empire of television, radio, and print organizations. She has also been sanctioned by the EU and the UK.

Natalya Valeryevna Popova (Popova) is the First Deputy Director of Non-State Development Institute Innopraktika, a technology company in Russia. Popova was designated today pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy, and for being or having been a leader, official, senior executive officer, or member of the board of directors of LLC VEB Ventures, an entity designated pursuant to E.O. 14024. Popova was also designated for being a spouse or adult child of Kirill Aleksandrovich Dmitriev, a person whose property and interests in property are blocked pursuant to section 1(a)(iii)(A) of E.O. 14024.

Sanctions Evasion Attempts

Joint Stock Company Promising Industrial and Infrastructure Technologies (JSC PPIT) is a financial institution owned by the Russian Federal Agency for State Property Management. JSC PPIT attempted to facilitate the circumvention of sanctions imposed on the Russian Direct Investment Fund (RDIF). In late February 2022, RDIF Deputy CEO Anatoly Alexandrovich Braverman indicated plans to transfer all assets and cash from RDIF to JSC PPIT. The proposal was related to the anticipated addition of RDIF to OFAC’s Specially Designated Nationals and Blocked Persons List.

JSC PPIT was designated today pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation, and for operating or having operated in the financial services sector of the Russian Federation economy.

The transfer of assets and cash was thought to be a viable method to evade restrictions on RDIF. With today’s action, OFAC has sent a clear message that those who facilitate U.S. sanctions evasion will themselves be sanctioned.

Relatedly, Anton Sergeevich Urusov (Urusov), General Director of JSC PPIT, was designated today pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of JSC PPIT, an entity whose property and interests in property are blocked pursuant to E.O. 14024, and for being or having been a leader, official, senior executive officer, or member of the board of directors of the Government of the Russian Federation.


As a result of today’s action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

For information concerning the process for seeking removal from any OFAC list, including OFAC’s List of Specially Designated Nationals and Blocked Persons, please refer to OFAC’s Frequently Asked Question 897. Additional information regarding sanctions programs administered by OFAC.

Identifying information on the individuals and entities sanctioned or property identified today. 


OCC Allows National Banks and Federal Savings Associations Affected by Flooding in Kentucky to Close

News Release 2022-93 | August 1, 2022

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas affected by flooding in Kentucky.

In issuing the proclamation, the OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

OCC Bulletin 2012-28, “Supervisory Guidance on Natural Disasters and Other Emergency Conditions” (September 21, 2012), provides guidance on actions bankers could consider implementing when their bank or savings association operates or has customers in areas affected by a natural disaster or other emergency.

Related Links

Media Contact

Stephanie Collins
(202) 649-6870

Economy Statement by Benjamin Harris, Assistant Secretary for Economy Policy, for the Treasury Borrowing Advisory Committee August 1, 2022

Economic data were mixed in the second quarter of 2022.  Real GDP contracted mildly for a second consecutive quarter, but employment continued to rise.  Firms added an average of 375,000 jobs per month and the unemployment rate remained near a half-century low.  Surging energy and food prices—due in part to Russia’s invasion of Ukraine—pushed up headline inflation to new highs, though core inflation remained elevated as well.  At the same time, housing data suggested the start of a market correction as high house prices and rising interest rates constrained demand for new and existing homes.

As in the first quarter, the economic environment was framed by the emergence of new coronavirus variants, tightening monetary policy, negative impacts from Russia’s invasion of Ukraine, and supply-demand mismatches.  Production was constrained by physical disruption of transportation and other aspects of supply chains, including COVID-related lockdowns, and continued shortages of production materials, such as semiconductors for motor vehicles.  Inflation at the headline and core levels has continued to climb this year, but at the margins, there is some easing of prices in some markets: the federal government has taken a variety of steps to reduce gasoline prices and tightness in grain markets may be loosening.

GDP Growth

According to the advance estimate of second quarter GDP (released Thursday, July 28), real GDP declined by 0.9 percent at an annual rate, following a 1.6 percent drop in the first quarter.   The pullback in economic activity in the second quarter primarily reflected a significantly slower build-up of private inventories, in addition to less residential investment and government spending.  By contrast, net exports and personal consumption expenditures (PCE) both contributed positively to GDP growth.  Despite two consecutive quarters of modest contraction, real GDP was still up 1.6 percent over the last four quarters.

Real private domestic final purchases (PDFP)—the sum of personal consumption, business fixed investment, and residential investment—was flat in the second quarter, after rising 3.0 percent at an annual rate in the first quarter.  This measure, which excludes final public and international demand for goods and services, as well as the change in private inventories, is typically a better indicator of the private sector’s capacity to generate self-sustaining growth.  A flat reading for PDFP indicates a slowing in underlying growth.

Real PCE—the largest component of PDFP and roughly two-thirds of real GDP—rose by 1.0 percent in the second quarter on an annualized basis, slowing from a 1.8 percent increase in the first quarter.  Consumption reflected the rotation from goods to services as households slowly returned to pre-pandemic patterns of spending.  Consumption of services rose 4.1 percent due to recovering demand for food services and accommodations, recreation, transportation, and health care.  Meanwhile, consumption of goods fell by 4.4 percent as spending on both durable and nondurable goods pulled back from elevated levels.  Household expenditures on durable goods were 2.6 percent lower, while spending on nondurables dropped 5.5 percent.  The latter partly reflected higher prices for gasoline as well as for food and beverages consumed at home.  Although households are returning to pre-pandemic styles of consumption, the rotation remains incomplete.  The composition of total PCE remains weighted more heavily toward goods than services: as of the second quarter of 2022, the share of goods in total PCE was 4 percentage points higher than the pre-pandemic (2015-2019) average.

Business fixed investment (BFI) declined 0.1 percent in the second quarter, after surging by 10.0 percent at an annual rate in the first quarter.  This was the first decline in BFI after seven consecutive quarterly advances.  Investment in structures posed a much larger drag on growth, dropping 11.7 percent in the latest quarter, after slipping 0.9 percent in the first quarter.   Equipment investment decreased 2.7 percent in the second quarter, following a 14.1 percent jump in the previous quarter.  Investment in intellectual property products, which was the sole positive contributor to business investment spending, rose 9.2 percent at an annual rate in the second quarter, slowing modestly from a 11.2 percent advance in the first quarter.

Real residential investment—the third and final component of PDFP—fell by 14.0 percent at an annual rate in the second quarter, following a 0.4 percent increase in the previous quarter.  Lower investment was broad-based.  Single-family structures spending fell 4.2 percent while multi-family structures investment was down 5.6 percent.  Other structures investment—that is, manufactured homes, group housing, and ancillary spending like brokers’ commissions—dropped 22.2 percent in the second quarter.

The remaining components of GDP represent public sector demand, international demand, and buildup or drawdown of private inventories.  Of these, the change in private inventories (CIPI) posed the largest drag on the economy’s performance in the second quarter. Although firms added $82 billion (constant 2012 dollars) to inventories in the second quarter, the buildup was less than half the $189 billion first quarter increase.  As a result, CIPI subtracted 2.0 percentage points from real GDP growth in the second quarter.  Inventories tend to be a volatile component of GDP and have remained volatile through the pandemic; in the second quarter, slower private inventory investment was led by slower growth of retail inventories, particularly at general merchandise stores and a drawdown in automotive inventories.

On the international side, the trade deficit narrowed by $70.0 billion to $1,474.7 billion in the second quarter, adding 1.4 percentage points to GDP growth.  Total exports of goods and services surged by 18.0 percent at an annual rate, led by industrial supplies and materials as well as services (travel).  Meanwhile, total import growth slowed to 3.1 percent.  The second quarter improvement in the trade deficit was the first since the middle of 2020.

For public-sector demand of goods and services, total government spending declined 1.9 percent at an annual rate in the second quarter, after decreasing 2.9 percent in the previous quarter.  Federal government consumption and investment fell by 3.2 percent, accounting for about two-thirds of the decrease in public spending.  The nondefense category drove the decline at the federal level, largely reflecting the sale of crude oil from the Strategic Petroleum Reserve (SPR), which was tabulated as a decrease in nondefense consumption expenditures.  Meanwhile, defense spending rose 2.5 percent, after five consecutive quarters of decline, and state and local government consumption declined 1.2 percent in the second quarter.

Labor Markets and Wages

Labor markets remained very tight in the second quarter.  After generating 6.7 million payroll jobs last year and 1.6 million jobs in the first quarter, the economy added another 1.1 million in the second quarter.  As of June, a total of 21.5 million jobs have been recovered during the current recovery, or 98 percent of those lost during the two-month recession in early 2020.  Private sector payrolls now exceed pre-pandemic levels.  The unemployment rate, meanwhile, has remained at 3.6 percent since March, just one-tenth of a percent above the half-century low of 3.5 percent seen just before the onset of the pandemic.  The broadest measure of unemployment—the U-6 rate, a measure of labor underutilization that includes underemployment and discouraged workers in addition to the unemployed—has also continued to decline in 2022, reaching 6.7 percent in June.  This is the lowest U-6 rate in the history of the series, which dates from January 1994.  As of June 2022, the long-term (27 or more weeks) unemployment rate, expressed as a percentage of the labor force, also dropped sharply last year and, this rate had declined to 0.8 percent, or only 0.1 percentage point above the pre-pandemic low.

By contrast, recovery in labor force participation stalled in the second quarter of 2022.  After climbing to 62.4 percent in March, or 1.0 percentage point below the pre-pandemic rate, the total labor force participation rate (LFPR) eased to 62.2 percent in June.  For prime-age (ages 25 to 54) workers, the LFPR in June was 82.3 percent, down 0.2 percentage points from March and 0.8 percentage points below the nearly twelve-year high of 83.1 percent reached in January 2020.  For those older than 55 years of age, the LFPR stood at 38.4 percent in June, reversing all of the improvement seen in the first quarter.  Between 2016 and 2019, the LFPR for those older than 55 averaged 40.1 percent, but over the past 2½ years, this rate has averaged 38.8 percent, possibly suggesting a downward shift in labor force participation among older adults due to such factors as Covid concerns and rising retirement rates.

Labor market conditions remain historically tight as labor supply has not matched labor demand, which has been at or near record highs since February 2021.  Just before the pandemic, the number of job openings were at a near-peak at 7.4 million at the end of October 2019.  By the end of May 2022 (latest available data), job openings stood at 11.3 million, roughly 50 percent above the pre-pandemic high.  Given the mismatch, workers retain considerable leverage with regard to job mobility and wage demands.  By the end of May 2022, the number of job quits ticked down to 4.3 million but was still roughly 20 percent above the pre-pandemic high, and the official number of unemployed persons per job opening was at a record low of 0.5 for the third consecutive month in May.  For the two years immediately preceding the pandemic, the unemployed person per job opening ratio ranged between 0.8 and 1.0.

Persistent tightness in labor markets continues to support strong nominal wage growth.  For production and nonsupervisory workers, nominal average hourly earnings increased 6.4 percent over the year through June 2022—though this is somewhat slower than the 6.7 percent pace registered earlier this year from January to March.  The Employment Cost Index (ECI), which better controls for changes in labor composition and is a more comprehensive measure of total compensation, showed private sector wages increasing 5.7 percent over the twelve months ending in June 2022, accelerating from the previous quarter’s twelve-month pace of 5.0 percent and marking the fastest yearly rate since the fourth quarter of 1982. 


Inflation strengthened in the second quarter of 2022.  Over the twelve months through June 2022, the Consumer Price Index (CPI) rose 9.1 percent.  The CPI for energy goods and services surged 41.6 percent over the year through June, accounting for a third of the headline increase and marking the largest year-over-year increase since the Russian invasion of Ukraine in late February.  Food prices rose 10.4 percent over the year, contributing about 15 percent of the overall increase in June, and reflecting rising prices for energy as well as fertilizers and other agricultural input costs and ongoing supply chain disruptions.  Stripping out the volatile food and energy components, core inflation was 5.9 percent over the twelve months through June, slowing marginally for the third consecutive month.

With regard to monthly developments, the CPI for all items has generally trended higher thus far in 2022.  More than half of inflation experienced so far in 2022 is accounted for by food and energy.  After slowing to 0.3 percent in April, reflecting a modest and temporary retreat in energy price inflation, the headline rate has since accelerated on sharply higher energy and food prices, rising 1.3 percent in June.  Looking at specific commodities in the wake of the Russian invasion, the price of West Texas Intermediate (WTI) advanced nearly 33 percent from the day before the invasion through early June, and the price of natural gas increased almost 106 percent over the same period.  Depending upon the variety, the price of wheat increased over that same period by as much as 47 percent.  Meanwhile, the average price of U.S. regular gasoline jumped about 42 percent from the same point in February through mid-June.  Since then, however, regular gasoline’s price has declined 9.4 percent through mid-July and wheat prices have fallen been 20 and 25 percent, depending upon the variety.  Despite the notable easing in commodity prices in recent weeks, gasoline and other energy prices remain significantly elevated relative to year-ago levels, and food price inflation may remain elevated as high energy prices filter through agriculture supply chains.

Core CPI growth has accelerated in each month of the second quarter and rose by 0.7 percent in June.  Among the components of core goods CPI, new and used car prices have begun to increase againalbeit at a slower pace than seen last year.  Among services, the shelter price index—which accounts for about 40 percent of the core CPI—has been running in the range of 0.5 percent to 0.6 percent for the past five months.  In June, CPI rent of primary residence jumped 0.8 percent and owners’ equivalent rent surged 0.7 percent accounting for 40 percent of monthly core CPI inflation.  In recent months, the owners’ equivalent rent portion of shelter has dominated shelter inflation, but would-be home buyers appear to be turning to the rental market amid rising mortgage rates and high house prices.  With evidence that new leases are being contracted at increasingly higher rates—monthly increases in the mid-teens in some metropolitan areas—the shelter component is expected to keep core inflation rates elevated in the near-term.

The Federal Reserves’ preferred measure of inflation is the PCE price index.  The PCE price index assigns different weights for different components than does the CPI and uses a different methodology in its calculation, the drivers of both measures remain similar.  As with the CPI, the headline PCE accelerated to 1.0 percent in June, and the core PCE measure advanced 0.6 percent.  Inflation as measured by the PCE and core PCE price indices is running at a lower rate than CPI inflation, largely due to the higher weight of health care services in PCE, which has seen more normal rates of price increases.  PCE inflation typically runs at a slower pace than CPI inflation due to the methodological and weighting differences.  From 2000 to 2019, headline PCE inflation was 0.3 percentage points slower than CPI inflation on a year-over-year basis, while core PCE inflation was typically 0.2 percentage points slower than core CPI inflation.  Since spring 2021, however, the gaps have widened considerably.  As of June 2022, PCE inflation was 6.8 percent on a year-over-year basis, or 2.3 percentage points below CP inflation.  The gap between core measures has also widened—though to a lesser extent.  Core PCE inflation was 5.3 percent over the year ending June, compared to 5.9 percent inflation as measured by the core CPI.

Housing Markets

In the second quarter, housing markets began to see minor easing of the supply-demand imbalances that were aggravated by the pandemic.  Rising mortgage rates and still-rapid price appreciation have weighed on home purchases.  Existing and new home sales have been trending lower since the beginning of the year.  In June, existing home sales—which account for 90 percent of all home sales—declined 5.4 percent over the month and were down 14.2 percent on a twelve-month basis.  New single-family home sales declined 8.1 percent in June and were down 17.4 percent over the year through June.  Lower sales have led to higher inventories of homes available for sale: since falling to an all-time low of 850,000 homes in January and February 2022, existing home inventories have risen to nearly 1.3 million homes as of June.  Inventories are now equivalent to 3.0 months of sales, roughly double the series’ low of 1.6 months from January, but still low relative to the average 3.9 months of supply in 2019.   For new homes, the inventory of new single-family homes available for sale has risen well above the 7-month supply deemed consistent with a balanced market; at the end of June, there were 9.3 months’ supply of new homes on the market. 

So far, the decrease in demand has had only a small effect on house price appreciation, though house prices are measured with a lag.  The Case-Shiller national house price index—which measures sales prices of existing homes—was up 19.7 percent over the year ending in May 2022, faster than the 16.9 percent advance over the year through May 2021, and a nearly five-fold increase over the 4.4 percent, twelve-month rate seen through May 2020.  The FHFA house price index rose 18.3 percent over the year ending in May 2022, in line with the 18.2 percent pace over the year through May 2021 but more than three times the 5.2 percent rise registered over the year through May 2020.  Although each index in May 2022 registered its slowest monthly pace in roughly six months, both indices have risen above 1 percent monthly since August 2020.

Meanwhile, new construction weakened in the second quarter.  After falling by 1.7 percent from December to March, single-family housing starts dropped 17.5 percent from March to June.  Single-family permits were down 16.6 percent in the second quarter, despite a gain of 4.0 percent the previous quarter.  However, the multi-family sector, albeit volatile, rebounded in the second quarter, with multi-family starts up 9.9 percent, after a 5.6 percent decline in the previous quarter.  Moreover, the total number of homes under construction as of June 2022 (single-family and multi-family) was at a series high (data series begins in 1970), while the number of new housing units that have been authorized, but not yet started (i.e., the backlog of new construction) stood at 285,000 in June 2022, just below the all-time high of 290,000 units reached in March (data begin in 1999).

Risks to the Outlook

Since the previous Economy Statement to the Treasury Borrowing Advisory Committee, the pandemic has become a less acute risk to the economic outlook—though it still poses headwinds to the economy.  Although new strains of the Omicron variant are more able to infect vaccinated people, vaccines are proving effective against serious complications and hospitalization rates are well below those seen during previous variant waves.

Inflation: Inflation remains the dominant downside risk to the economy, as it has led to lower real spending, declining real wages, and historically pessimistic consumer sentiment.  Headline inflation is being elevated by the global effects of Russia’s invasion of Ukraine. 

Core inflation also remains high and has yet to show clear signs of easing.  Inflation for owner-occupied housing, resulting from the sharp jumps in house prices in recent years, has put a high floor for core inflation, and rising demand for rental properties is putting upward pressure on rents.  Core inflation is broad-based across both goods and services.  Prices for core goods remain stubbornly high, and lean inventories of durable goods—particularly inventories of motor vehicles—mean minor supply-chain disruptions can lead to sharp prices increases.  However, policies to reduce inflation may result in further asset market volatility, lower consumption and investment growth, and slower job growth.

Energy Commodity Prices:  Following Russia’s invasion of Ukraine, energy commodity prices spiked, contributing to the sharp rise of inflation and reduced demand for non-energy goods and services.  Although prices of oil, natural gas, and gasoline remain high, prices started to decline at the end of the second quarter.  Since mid-June, for example, consumers have seen a 14.3 percent decline in the price of regular retail gasoline, which will push down monthly inflation in July.

However, additional energy commodity price volatility poses a risk to U.S. economic growth.  High energy prices feed into large aspects of agriculture and manufacturing supply-chains, further weakening the ability of supply to meet demand.  Sharp price jumps also quickly reduce households’ purchasing power, potentially causing a pull back in other areas of consumption.  In addition, commodity price shocks are likely to have an outsized shock on other advanced economies, which can weaken international demand for U.S. goods and service exports, further slowing economic grown.

Russia’s unlawful invasion is the primary cause of high global prices.  Accordingly, the U.S. Treasury has been working recently with finance ministers in the G-7 to implement price caps on Russian oil, representing a significant step in advancing the Administration’s twin goals of sharply reducing Russian revenue and avoiding further disruptions to global energy supplies. 


Real GDP declined 0.9 percent at an annual rate in the second quarter of 2022, after dropping 1.6 percent in the first quarter.  PDFP growth, which had accelerated strongly in the first quarter despite a 1.6 percent decline in real GDP, slowed in the latest quarter to a flat reading.  However, the second quarter’s setback was a function of slower inventory investment; absent inventories, Real Final Sales of Domestic Product grew 1.1 percent, reflecting strong growth in exports and a further increase in consumer spending.

Treasury Targets Companies Supporting Iranian Petrochemical Conglomerate

WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against companies used by Iran’s Persian Gulf Petrochemical Industry Commercial Co. (PGPICC), one of the nation’s largest petrochemical brokers, to facilitate the sale of tens of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iran to East Asia. PGPICC is a subsidiary of Iran’s petrochemical conglomerate Persian Gulf Petrochemical Industry Co. (PGPIC), which accounts for half of all of Iran’s total petrochemical exports.

“The United States continues to pursue the path of diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Until such time as Iran is ready to return to full implementation of its commitments, we will continue to enforce sanctions on the illicit sale of Iranian petroleum and petrochemicals.”

Today’s action is being taken pursuant to Executive Order (E.O.) 13846 and follows OFAC’s July 6, 2022 designation of an Iranian oil and petrochemical network selling Iranian petroleum and petrochemicals to purchasers in East Asia, and the June 16, 2022 designation of an international sanctions evasion network supporting Iranian petrochemical sales.

In a separate but related action, the Department of State is also designating two entities that have engaged in the purchase, acquisition, sale, transport, or marketing of Iranian petroleum and petroleum products, including providing logistical support to the Iranian petroleum trade, pursuant to E.O. 13846.  

Iranian Petrochemical and Petroleum Sales to East Asia

PGPICC has used UAE-based Blue Cactus Heavy Equipment and Machinery Spare Parts Trading L.L.C. to facilitate the sale of millions of dollars’ worth of Iranian-origin petroleum products to Triliance Petrochemical Co. Ltd. (Triliance) for onward shipment to East Asia. Triliance remains one of Iran’s most important petrochemical brokers, brokering the sale of Iranian petrochemicals to foreign purchasers. Blue Cactus Heavy Equipment and Machinery Spare Parts Trading L.L.C. is being designated pursuant to E.O. 13846 for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, PGPICC.

PGPICC was designated pursuant to E.O. 13382, a counterproliferation authority, on July 7, 2019, for being owned or controlled by PGPIC. PGPIC was itself designated pursuant to E.O. 13382 that same day for having provided financial support to Khatam al-Anbiya, the engineering conglomerate of Iran’s Islamic Revolutionary Guard Corps (IRGC).   

Triliance was designated pursuant to E.O. 13846 on January 23, 2020, for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the National Iranian Oil Company (NIOC).                                        

PGPICC, in cooperation with Treasury-sanctioned Iranian petrochemical broker Petrochemical Commercial Company (PCC), has similarly used Farwell Canyon HK Limited (Farwell Canyon) and Shekufei International Trading Co., Limited (Shekufei) to facilitate the sale of tens of millions of dollars’ worth of Iranian-origin petrochemical and petroleum products for onward shipment to buyers in East Asia. PGPICC has used Farwell Canyon and Shekufei’s bank accounts, as well as those of Hong Kong- and Malaysia-based PZNFR Trading Limited, to collect millions of dollars’ worth of proceeds from these sales.

Farwell Canyon HK Limited, Shekufei International Trading Co., Limited, and PZNFR Trading Limited are being designated pursuant to E.O. 13846 for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, PGPICC. 

Sanctions Implications

As a result of today’s action, all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to an enforcement action. Furthermore, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here.  For detailed information on the process to submit a request for removal from an OFAC sanctions list, please here.

Click here for identifying information on the individuals and entities designated today.


READOUT: Deputy Secretary of the Treasury Wally Adeyemo’s Visit with Emergency Capital Investment Program Recipient Institutions in North Carolina

Today in North Carolina, Deputy Secretary Wally Adeyemo visited the Raleigh Branch of the Latino Community Credit Union (LCCU), where he met with leaders of the LCCU and Self-Help Credit Union (Self-Help). During the visit, the Deputy Secretary heard about the impact of Treasury’s Emergency Capital Investment Program (ECIP) on the local community and the role of credit unions in serving the banking and capital access needs of communities of color, small businesses, and rural residents of North Carolina. Both Self-Help and LCCU are recipients of ECIP funds. 

Established by the Consolidated Appropriations Act, 2021, ECIP is designed to support community development financial institutions (CDFIs) and minority depository institutions (MDIs) in expanding their efforts to support small businesses and consumers in their communities. Under the program, Treasury is providing nearly $9 billion in capital directly to depository institutions that are certified CDFIs or MDIs to, among other things, provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities, that may be disproportionately impacted by the economic effects of the COVID-19 pandemic.

Treasury Announces North Carolina Approved to Receive Up to $201.9 Million to Promote Small Business Growth and Entrepreneurship through the American Rescue Plan

Deputy Secretary Adeyemo Announced the Approval of North Carolina’s State Small Business Credit Initiative (SSBCI) Plan at Event in Raleigh with North Carolina Secretary of Commerce Machelle Baker Sanders

WASHINGTON – Today, the U.S. Department of the Treasury announced the approval of North Carolina’s application for funding under the State Small Business Credit Initiative (SSBCI). President Biden’s American Rescue Plan reauthorized and expanded SSBCI, which was originally established in 2010 and was highly successful in increasing access to capital for small businesses and entrepreneurs. The new SSBCI builds on this successful model by providing nearly $10 billion to states, the District of Columbia, territories, and Tribal governments to increase access to capital and promote entrepreneurship, especially in traditionally underserved communities as they emerge from the pandemic.  Deputy Secretary Wally Adeyemo announced the approval of North Carolina’s plan alongside North Carolina Secretary of Commerce Machelle Baker Sanders at the North Carolina Rural Center in Raleigh. The North Carolina Rural Center administers funding for small businesses from local and federal sources, including from the SSBCI program. As part of the announcement, Deputy Secretary Adeyemo and Secretary Sanders participated in a roundtable discussion with local small businesses and financial institutions that participated in the first round of SSBCI.

“This historic investment in entrepreneurship, small business growth, and innovation funded by the American Rescue Plan will help reduce barriers to capital access for traditionally underserved communities across the state,” said Deputy Secretary of the Treasury Wally Adeyemo. “I was glad to have an opportunity to hear from North Carolina small business owners and financial institutions during my visit today and look forward to seeing the impact these funds have in promoting equitable economic growth in North Carolina.”

“The State Small Business Credit Initiative provides vital support for our small businesses, particularly for those who often face challenges in accessing capital,” said North Carolina Commerce Secretary Machelle Baker Sanders. “I’m excited to see how this next round of funding will help many of our state’s small, women- and minority-owned businesses across our rural communities grow and become more resilient.”

“Since 2011, the North Carolina Rural Center has administered the State Small Business Credit Initiative on behalf of the state of North Carolina,” said North Carolina Rural Center President Patrick Woodie. “We are immensely proud that the program has been a national leader in working with private lenders across the state to help more small business owners get the critical commercial capital they need to start or expand their business. We are deeply honored by the trust placed in us by the North Carolina Department of Commerce, the General Assembly, and the Office of the Governor to once again lead in the deployment of this new allotment of funding for this proven and trusted initiative.”

North Carolina, approved for up to $201.9 million, will operate three different programs, including a loan participation program to which it has allocated $160 million.  The loan participation program expands access to capital by purchasing subordinate participations in small business loans made by financial institutions. The program helps lenders engage in small business lending and provide support to underserved businesses. The state has partnered with the North Carolina Rural Center to administer the program which aims to support communities in their efforts to revitalize central business districts, strengthen neighborhoods, foster small business recovery, and support economic growth.

SSBCI funding is expected to catalyze up to $10 of private investment for every $1 of SSBCI capital funding, amplifying the effects of this funding and providing small business owners with the resources they need to sustainably grow and thrive. State governments submitted plans to Treasury for how they will use their SSBCI allocation to provide funding to small businesses, including through venture capital programs, loan participation programs, loan guarantee programs, collateral support programs, and capital access programs. To date, Treasury has approved state plans totaling more than $1.7 billion in funding to promote small business growth through SSBCI.

A White House report released in June found that more Americans are starting new businesses than ever before. In 2021, Americans applied to start 5.4 million new businesses – 20% more than any other year on record. It also found that small businesses are creating more jobs than ever before, with businesses with fewer than 50 workers creating 1.9 million jobs in the first three quarters of 2021 – the highest rate of small business job creation ever recorded in a single year. The investments being made through SSBCI are a key part of the Biden Administration’s strategy to keep this small business boom going by expanding access to capital and by providing entrepreneurs the resources they need to succeed. The work Treasury has done through the implementation process to ensure SSBCI funds reach traditionally underserved small businesses and entrepreneurs will also be critical to ensuring the small business boom not only continues but also continues to lift up communities disproportionately impacted by the pandemic. Treasury intends to continue approving state plans on a rolling basis.


Treasury Targets the Kremlin’s Continued Malign Political Influence Operations in the U.S. and Globally

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), as part of a joint action with the Department of Justice, sanctioned two individuals and four entities that support the Kremlin’s global malign influence operations and election interference activities. The individuals and entities designated today played various roles in Russia’s attempts to manipulate and destabilize the United States and its allies and partners, including Ukraine. This action follows a series of OFAC designations that have highlighted and disrupted Russia’s persistent election interference operations and destabilization efforts against Ukraine.

Today’s actions demonstrate the U.S. government’s resolve to protect free and fair elections, as well as other democratic institutions and processes. This action is separate and distinct from the broad range of high impact measures the United States and its allies and partners continue to impose on Russia for its war against Ukraine, which is another clear example of the Kremlin’s disregard for the sovereignty – and independence – of other states.

“Free and fair elections form a pillar of American democracy that must be protected from outside influence,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “The Kremlin has repeatedly sought to threaten and undermine our democratic processes and institutions. The United States will continue our extensive work to counter these efforts and safeguard our democracy from Russia’s interference.”

Russian intelligence services, including the Russian Federal Security Service (FSB), support Kremlin-directed influence operations against the United States and its allies and partners, and often recruit individuals, known as “co-optees. Russia’s intelligence services then leverage these individuals to create or heighten divisions within the country. Russia’s co-optees carry out specific assignments, inform Russia’s intelligence services about specific people and events, and conduct specific assignments for them.

In addition to using co-optees to advance its malign influence operations, the Kremlin is known to use a collection of official, proxy, and unattributed digital channels and platforms, such as outlets operated by Russian intelligence services and witting and unwitting propagators of the Kremlin’s narratives, to create and amplify misinformation, disinformation, and propaganda. One notable broad Kremlin interference effort is Yevgeniy Viktorovich Prigozhin’s (Prigozhin) Project Lakhta, which is a disinformation campaign and scheme funded by Prigozhin targeting audiences in the United States, Europe, Ukraine, and even Russia.

Project Lakhta has expenses in the tens of millions of dollars, including an operating budget in the millions of dollars, which it uses to fund troll farms and other mechanisms of malign influence. Since at least 2014, Project Lakhta has used, among other things, fictitious online personas that posed as U.S. persons in an effort to interfere in U.S. elections. Prigozhin is the financier of the Internet Research Agency (IRA), the Project Lakhta-related troll farm in Russia that OFAC designated pursuant to Executive Order (E.O.) 13848 in 2018 for interfering in the 2016 presidential election. Prigozhin himself has been designated pursuant to E.O. 13661, 13694, as amended, and 13848. In addition to today’s sanctions designation, the U.S. is seeking, via the Department of State’s Reward for Justice program, any tips on his planned future election interference efforts.

FSB Co-Optee Targets U.S. Elections and Socio-Political Divisions

Since at least mid-2018, Russian Federation national Aleksandr Viktorovich Ionov (Ionov) has been an FSB co-optee who uses his positions and various companies to promulgate the Kremlin’s disinformation and malign influence agenda.

Since at least the summer 2020, Ionov cooperated and coordinated with the FSB to identify socio-political points of contention within the United States. He provided support, usually in the form of monetary donations, to organizations that he and Russia’s intelligence services believed would create socio-political disturbances in the United States. In the summer of 2021, Ionov informed the FSB about a known U.S. person’s political ambitions; the FSB subsequently expressed an interest in this person.

Ionov cooperates with Prigozhin’s Project Lakhta entities to publish and disseminate disinformation. In the summer 2021, Ionov sought to collaborate with Prigozhin’s Foundation for Battling Injustice (FBR) about the feasibility of directly supporting a specific candidate in a 2022 U.S. gubernatorial election. In mid-2021, Ionov worked to disseminate and promulgate disinformation that would influence the US. election process and exacerbate the socio-political division within the United States.

In addition to his disinformation activities at the direction of the FSB and in support of the Kremlin, in 2018, Ionov established a fundraising campaign through a website for Maria Butina (Butina),the Russia Federation national who plead guilty to felony charges of conspiracy to act as an unregistered foreign agent of the Russian state in December 2018. Ionov indicated in a March 2019 interview that the website, at the time, had raised about $30,000 to help pay Butina’s legal fees.

Ionov is the president and founder of the Anti-Globalization Movement of Russia (AGMR), whose English-language website claims to be a socio-political movement “against certain aspects of the globalization process” and seeks to stop “manifestations” of the so-called “new world order.” AGMR has maintained connections with separatists and anti-establishment groups in the United States and abroad, holding conferences and protests in the United States in opposition to U.S. policy. AGMR has received funding from Russia’s National Charity Fund, a trust created by Russian Federation President Vladimir Putin which gathers money from Russia’s state-owned companies and oligarchs.

Ionov is also the president, founder, and 100% shareholder of Ionov Transkontinental, OOO (Ionov Transkontinental), which has a footprint in Iran, Venezuela, and Lebanon.

STOP-Imperialism is an English and Russian-language website that styles itself as a “global information agency.” STOP-Imperialism’s website does not provide any contact or “about us” information, a tactic often used to obfuscate ownership or association, yet Ionov is the registrant of STOP-Imperialism’s domain. Additionally, STOP-Imperialism is identified on AGMR’s website as an “information partner,” which indicates that Ionov and AGMR use STOP-Imperialism as a means of further disseminating disinformation in fulfillment of the Kremlin’s overall malign influence campaign.

Ionov was designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation.

In addition to being added to the SDN List, the Department of Justice unsealed an indictment charging Ionov for his foreign malign influence activities against the United States.

AGMR and Ionov Transkontinental were designated pursuant to E.O. 14024 for being owned or controlled by, directly or indirectly, Ionov, a person whose property and interests in property are blocked pursuant to E.O. 14024.

STOP-Imperialism was designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Ionov, a person whose property and interests in property are blocked pursuant to E.O. 14024.

Kremlin GONGO and its Leader, Agents of Russia’s Intelligence serviceS

In addition to co-optees and various digital channels and platforms, the Kremlin also uses state-sponsored and state-controlled proxy organizations, commonly referred to as “government organized non-governmental organizations” (GONGOs) to achieve its goals both inside and outside Russia. In the international realm, these Kremlin proxy organizations are a key part of the Kremlin’s “kleptocracy” network, as they lure in foreign actors and fund local partners and manipulate open societies to promote the Kremlin’s views, stir divisions, and distract international communities from pressing issues.

Natalya Valeryevna Burlinova (Burlinova) is the founder and president of the Center for Support and Development of Public Initiative Creative Diplomacy (PICREADI, also known as “Creative Diplomacy”). Burlinova has described PICREADI as being independent in thought and mission, but it is reliant on state funding. Despite trying to hide its relationship with the Russian government and its intelligence services, Russia’s intelligence services direct and fund Burlinova and PICREADI.

Since 2017, PICREADI has held an annual public policy event called “Meeting Russia” in Moscow, which PICREADI claims is to bring together “aspiring leaders” in academia, analytical centers, media, private sector, and governmental institutions to facilitate dialogue among a new generation of leaders and draw attention to critical points in Russia’s relations with the United States and the European Union. However, since at least 2017, Russia’s intelligence services have tracked the activities and career paths of past participants in PICREADI’s events.

Burlinova was designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation.

PICREADI was designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation, as well as for being owned or controlled by, directly or indirectly, Burlinova, a person whose property and interests in property are blocked pursuant to E.O. 14024.


As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person, or the receipt of any contribution or provision of funds, goods, or services from any such person.

Click here for more information on the individuals and entities designated today.


Office of Financial Research Pilots Cutting-Edge Data Hub to Assist with Climate-risk Assessments

WASHINGTON–Today, the Office of Financial Research (OFR) announces the launch of its Climate Data and Analytics Hub pilot, a new tool to help financial regulators assess risks to financial stability stemming from climate change.  This collaborative environment will improve users’ access to public climate and public financial data, high-performance computing tools, and analytical and visualization software.  Access to the pilot initially will be limited to the Federal Reserve Board of Governors (FRB) and the Federal Reserve Bank of New York (FRBNY), with the goal of expanding access to all of the Financial Stability Oversight Council (FSOC) member agencies.

“Financial regulators need both financial and non-financial data, as well as high-powered computing capabilities, to effectively research climate-related financial risks,” said James Martin, Acting Director of the Office of Financial Research. “The OFR is proud to partner with the Board of Governors of the Federal Reserve and the Federal Reserve Bank of New York to help assess and identify climate-related financial risks to financial stability.”

The Climate Data and Analytics Hub will allow pilot participants to integrate data from across the federal government, including wildfire, crop condition, precipitation, and other climate-related data with their public supervisory data for a more precise view of the relationship between climate change and financial stability risk.  The Hub is also equipped with statistical and visualization applications that will allow deeper insight into climate-related financial risks and vulnerabilities.

“Delivering a clearer assessment of financial risks due to climate change requires both climate data and financial data – information that is often siloed – and the ability to integrate these data,” said Nellie Liang, the Treasury Department’s Under Secretary for Domestic Finance. “Today, the Office of Financial Research is taking an important step toward enabling  policymakers to better understand and address risks to the financial system posed by climate change. By providing a shared database of both climate data and financial data and high-powered computing tools, OFR’s climate hub pilot will help streamline regulators’ access to this critical information, providing a new, more comprehensive view of climate-related financial risks.”

For more information, see OFR’s Climate Data and Analytics Hub Fact Sheet


READOUT: Financial Stability Oversight Council Meeting on July 28, 2022

WASHINGTON – Today, U.S. Secretary of the Treasury Janet L. Yellen convened a meeting of the Financial Stability Oversight Council (Council) in executive and public sessions by videoconference.  

During the executive session, the Council received an update from the Council’s staff-level Hedge Fund Working Group (HFWG) on its progress in developing a risk-monitoring framework, which is intended to inform the Council’s assessment of current and emerging risks to financial stability related to hedge fund activities.  During the first half of 2022, the HFWG has made significant progress in developing its risk monitor, which draws on qualitative and quantitative information about hedge fund activities in financial markets.  

The Council also received an update on the progress of the Council’s staff-level Climate-related Financial Risk Committee (CFRC), including progress made on implementing the recommendations from the Council’s climate report last year.  This marks the CFRC’s first update to the Council since the committee was established in December 2021.  

Additionally, the Council also heard an update from Treasury staff on the Council report being prepared in response to the Executive Order on Ensuring Responsible Development of Digital Assets.  The Council expects to issue the report in early fall 2022.
The Council also heard a presentation from staff of the Office of Financial Research (OFR) on the OFR’s work to collect data on non-centrally cleared bilateral repo transactions.  

During the public session, the Council received an update on the work of the Council and its members to identify and assess climate-related financial risk, including progress made by the CFRC.  This progress is described in a fact sheet available at the link below.  

The Council also voted to approve the minutes of its previous meeting on April 8, 2022.  

In attendance at the Council meeting by videoconference were the following members:  

  • Janet L. Yellen, Secretary of the Treasury (Chairperson of the Council)
  • Jerome H. Powell, Chair, Board of Governors of the Federal Reserve System
  • Michael J. Hsu, Acting Comptroller of the Currency
  • Rohit Chopra, Director, Consumer Financial Protection Bureau
  • Gary Gensler, Chair, Securities and Exchange Commission
  • Martin Gruenberg, Acting Chairman, Federal Deposit Insurance Corporation
  • Rostin Behnam, Chairman, Commodity Futures Trading Commission
  • Sandra L. Thompson, Director, Federal Housing Finance Agency
  • Todd M. Harper, Chairman, National Credit Union Administration
  • Thomas Workman, Independent Member with Insurance Expertise
  • James Martin, Acting Director, Office of Financial Research (non-voting member)
  • Steven Seitz, Director, Federal Insurance Office (non-voting member)
  • Charles G. Cooper, Commissioner, Texas Department of Banking (non-voting member)
  • Elizabeth K. Dwyer, Superintendent of Financial Services, Rhode Island Department of Business Regulation (non-voting member)

Additional information regarding the Council and its work, as well as the fact sheet on climate-related financial risk and meeting minutes, is available at  



Transcript of Secretary of the Treasury Janet L. Yellen’s Press Conference

Good afternoon and thank you for joining us. 

Right now, we’re in an important moment for our economy, and it presents an opportunity for us all to take stock. Coming in with the dips of the pandemic, the United States experienced an historic economic recovery. A rebound that’s unmatched in our nation’s modern history in its speed and scale. Right now, even in the face of global headwinds, including a war in Europe and successive variants of the pandemic, our economy remains resilient. Our unemployment rate stands at 3.6%, household finances are strong, and industrial output continues to grow. 

This outcome was not preordained in January 2021, when President Biden and this administration took office, the unemployment rate was 6.4 percent, 834,000 new jobless claims were being filed each week on average, and 20 million Americans were receiving unemployment benefits. Only 1 percent of Americans had been fully vaccinated against COVID-19, and over 3000 people were dying from the virus each day. In many respects, by the time President Biden took office, our economy had been brought to a standstill. 

At its core, our remarkable progress since then has been driven by this Administration’s policies, particularly through timely and targeted fiscal support in the Rescue Plan combined with the vaccination efforts that allowed businesses to reopen and Americans to get back to work. Over the course of the Administration, our economy has created over 9 million jobs, and the labor market is now at full employment. In 2021, we saw the biggest single year decline in unemployment on record, and the biggest year of economic growth in almost four decades. Fixed investment has recovered to pre-pandemic trend in just two years. By comparison, in the last two recessions, this never happened. And during this time, we also reduce the deficit by $1.5 trillion. 

These statistics are not abstractions. They represent American workers back at work, families with more financial security, and businesses, small and large, that have been able to hire and grow. As President Biden has said, we’ve entered a new phase in our recovery, focused on achieving steady stable growth without sacrificing the gains of the last 18 months.

We know there are challenges ahead of us. Growth is slowing globally, inflation remains unacceptably high, and it’s this Administration’s top priority to bring it down. We know how difficult higher prices can be for families, how they can squeeze a household budget, and how challenging the past two years of disruption caused by COVID-19 have been. And that’s why this Administration mounted an historic vaccination campaign to get the pandemic under control, and why we’re laser focused on bringing down prices. 

The same factors that have driven inflation to record levels internationally — in peers like Canada, the United Kingdom in the eurozone — those factors are hurting Americans as well. These challenges also include Vladimir Putin’s illegal and shameful war in Ukraine. More than half the inflation experienced in 2022 reflects rising food and energy costs — global fallout from Russia’s invasion — and it also reflects the lingering impacts of the pandemic, particularly in China where repeated lockdowns have brought their economy to a halt. 

While the Federal Reserve has a primary role in bringing down inflation, the President and I are committed to taking action to drive down costs and protect Americans from the global pressures we face. That includes the President’s historical release of 1 million barrels a day from the Strategic Petroleum Reserve, which helped reduce the price of gas by between 17 and 42 cents per gallon, according to a Treasury analysis this week. Americans have seen additional relief on this front, and in the last few weeks, prices have declined by over 60 cents a gallon in total. Our efforts also include the work we have done to develop a cap on the price of Russian oil, a way to ensure a steady flow of oil onto the global market, while denying pool revenue for his military. At a time of global anxiety over high prices, our price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs. 

The reconciliation package announced yesterday will also help ease inflationary pressures by lowering some of the biggest costs families face, including energy, health care, and prescription drugs, all while making historic investments in fighting climate change, and reducing the deficit. Importantly, this bill will also make sure we finally have the resources we need to ensure that wealthy Americans are not able to avoid paying the taxes they owe. These efforts are long overdue, and Congress should pass it immediately. 

This context, including the successes of last year and the global challenges we face, is critical in understanding today’s GDP data. Most economists and most Americans have a similar definition of recession: substantial job losses and mass layoffs, businesses shutting down, private sector activity slowing considerably, family budgets under immense strain. In sum: a broad-based weakening of our economy. 

That is not what we’re seeing right now when you look at the economy. Job creation is continuing, household finances remain strong, consumers are spending, and businesses are growing. 

As one example, in the last three months, our economy has created over 1.1 million jobs. In the three months beginning each modern recession outside of the pandemic, our economy lost 240,000 jobs on average. Spending by businesses and consumers, the core of our economic activity, rose by 3% in the first quarter of this year and continue to expand in the second. Industrial output — the measure of our manufacturing mining and utilities sectors — has shown strong average growth over the first half of the year compared to sharp average declines during past recessions. 

In the context of today’s report, it’s important to look beyond the headline number to understand what’s happening. The contraction in GDP was driven primarily by the change in private inventories, a volatile component of GDP which subtracted over two percentage points off quarterly growth. Today’s report shows continued expansion in consumer spending overall and in services in particular, in addition to notable strength and net exports. 

Overall, with a slowdown in private demand, this report indicates an economy that is transitioning to more steady, sustainable growth. This path is consistent with one that eases inflationary pressures, while maintaining the labor market progress of the past 18 months. 

While our economy has been resilient in the face of numerous shocks over the past two years, I should also stress that there are numerous risks on the horizon, many of them global, that we remain highly attuned to. They include the outcome of the war in Ukraine, COVID lock downs in China, and pandemic-related supply chain snarls. These factors make predicting the future difficult, and we must be clear eyed and vigilant about the threats they pose. But we cannot lose sight of the remarkable progress we have made from the depths of the pandemic and the tremendous resilience our economy has shown thanks to the hard work and perseverance of American workers, families and businesses, as well as effective policy. This progress gives us a solid foundation to confront the challenges ahead of us. And I believe that in the months to come, with skill and luck, it’s possible to maintain that strength, particularly in the labor market, while easing the tightness that has driven inflation. 

And with that I’d be happy to take your questions.


Q: Thank you, Secretary. Regardless of whether or not we’re in a recession, and you seem to be indicating not, many Americans are feeling some pain right now. And the last time we had to tame inflation at this level was the early 1980s, and it took two years to do that. Do you anticipate that this fight against inflation will be a long and grinding one like the early 80s, or will it be faster, and do we need to see some job losses in order to bring that inflation rate down? Thank you.

Secretary Yellen: So, with respect to how Americans are feeling about the economy, they’re experiencing great stress from high inflation. We simply haven’t seen anything like this since the 1970s, and seeing what’s happening to food prices and energy prices and rent and other prices in the economy is making families very concerned about their household budgets. They want to see it end, and this is pressure that’s real, that we recognize, and it’s the President’s top priority to bring inflation down. I think the key job here is the Federal Reserve’s, they’re clearly moving to address that and have indicated their commitment to bring it down. You know, through it, this is a very unusual situation, in that coming out of the pandemic, we have this set of supply chains challenges that continue to affect the economy, an example being the ongoing shortage of semiconductors that’s holding back production of vehicles, and it’s hard to know just what the timeframe is for those supply chain pressures to resolve and to ease. I think there are some positive signs that we’re seeing that suggest that inflation is likely to come down in the days ahead, but the proof of the pudding will be in the eating, but the Fed is taking the right measures. The administration and Congress are taking very important supplementary measures. As I mentioned, the releases from the Strategic Petroleum Reserve that have been one factor working to bring down gas prices, and the legislation that will make an enormous difference to prescription drug prices and serve to hold healthcare costs down, the investments in energy and to address climate change will, over time, improve greatly our sense of security about energy and make us much less vulnerable to global shocks. And as you know, we’re working with our allies on the price cap to avoid further upward pressure on oil and gas prices.
Q: Thank you very much. Chris Condon from Bloomberg News. I’d like to follow up on David’s question by asking you specifically: Do you think it will be necessary for unemployment to rise above 5% in order for inflation to reach the Fed’s longer-run target of 2%? Thank you.
Secretary Yellen: Well, I believe as I’ve said that there is a path to bring down inflation while maintaining a strong labor market, and most estimates of the natural rate of unemployment are lower than 5%. Now, it’s not a certainty that that can be done, but I believe there is a path to accomplishing that, and as Chair Powell was said repeatedly, that would be his objective to try to accomplish that, and I would consider that a good outcome as well. Clearly, we are seeing a slowing in the economy and in demand that’s appropriate and necessary to transition from rapid growth and recovery from a serious job shortfall to now a very strong labor market. We need to see a slowdown in growth. We are seeing that. I do believe there’s a path by which we maintain a strong labor market like that.
Q: Amara Omeokwe with the Wall Street Journal. Madam Secretary, could you say a little bit more about how you believe the inflation Reduction Act would impact inflation? How much do you believe that package would subtract from inflation and over what timeframe?
Secretary Yellen: So, I don’t have numerical estimates for you, but I see that as making a very important contribution to lowering the cost of prescription drugs, which is, for many households, a very severe burden on their household budgets. This is something that policymakers and members of Congress have sought to accomplish for many, many years, and it’s a great achievement if it can become law and will certainly help, and with respect to health care premiums, the funding that’s provided there is going to be important in holding down health insurance costs for many Americans. So, these are two important contributions that we should see come into play as soon as the legislation is passed and put into effect. Beyond that, there is deficit reduction in the bill, and over time, I see deficit reduction as an appropriate accompaniment to the policy changes the Fed is putting into effect.
Q: Secretary Yellen, in today’s GDP report, we saw very high nominal GDP growth. How does that high level of growth jive with the idea that the economy is slowing? And does it suggest that the economy is going to have to slow down at an even more aggressive pace in order to get back to 2% inflation?
Secretary Yellen: Well, I mean, we had high nominal GDP growth because inflation is high and that shows up in the GDP deflator. Real growth was reported in this advanced report as a negative number, and that’s a better metric to look at in assessing the overall performance of the economy. So, I see the last several quarters as exhibiting a significant slowdown in the pace of spending in the economy, and when you look at the details, in terms of spending components, we’re in a period where there’s very significant fiscal drag. Government spending made a negative contribution to GDP. We saw a negative contribution this quarter, huge from inventories, but importantly, consumer spending remains positive, but definitely the real data, to my mind, show that there is a slowdown in progress. And, you know, that the labor market right now is extremely tight and may be the source of some of the inflationary pressures, certainly not all of it by any means.
Food and energy are a very important contributor, supply chain problems relating to the pandemic and what’s happening in China, those are important, but we’ve got two job vacancies for every unemployed person, which is a level of tightness in the labor market that we really, I don’t think we’ve ever seen, historically, and the slowdown in the economy coupled hopefully with a restoration of somewhat higher level, a rebound in labor force participation. We’re not sure if that will occur, but beginning to take some of the tightness out of the labor market while maintaining overall a strong labor market, I think that’s a plan to bring down inflation.
Q: Thank you so much, Madam Secretary, Kayla Tausche from CNBC. Is there such a thing as a mild or a partial recession as some have suggested? And if so, what would that look like? And second, are you committed to staying in this role until growth and inflation stabilize? 
Secretary Yellen: I will stay in this role as long as President Biden finds my contributions to be useful. I serve at his pleasure. 

And, I’m sorry, what was the first part of the question was? Mild recession, well sure, recessions are different, and we had an extremely severe recession following the global financial crisis when unemployment rose to around 10%, and it took really a decade for the economy to get back to full employment. We’ve had milder recessions, certainly, than that, there’s usually been a significant increase in the unemployment rate, but they do differ. And, you know, this is a very unusual situation where we have a slowdown, the labor market remains very tight. You know, we could see some mild easing of pressures in the labor market and yet continue to feel we’ve got a good strong labor market that’s operating in full employment.
Q: Secretary Yellen, Mueller from Axios, there’s been a big run up in the dollar in the last few months in currency markets. That’s especially hard on emerging markets. Do you believe the degree of dollar appreciation we’ve seen so far is appropriate? Do you fear it’s gone too far, and should we be worried about kind of feedback loops and negative effects on the global economy? 
Secretary Yellen: Well, thanks for that question. I mean, there certainly has been a significant appreciation of the dollar. I think part of it is driven by interest rate differentials between the United States and other countries. As we’ve moved to tighten monetary policy more quickly, it’s attracted capital inflows into the United States that have pushed up the dollar, and that’s typically something that occurs in cycles of monetary policy: tightening. I think we’ve also seen some risk off safe haven-type flows into the dollar that have exacerbated that. 

You know, I am worried about the global outlook. The IMF and World Bank have, on several occasions now, downgraded the outlook. A strong dollar creates for some of those countries, pressures, pressures on their economies, especially when there’s dollar denominated debt becomes harder to pay off. So, a rising interest rate, strong dollar environment, can create pressures in other parts of the world, especially at a time when all of us are suffering from the impacts of pollutants war that are driving up energy and food prices and creating real burdens on most countries around the world and particularly the lowest income countries. We are seeing more countries that are likely to experience debt distress. So, this is a stressful environment for many countries around the world. You know, some countries are benefiting from higher commodity prices, though, so it’s an offset and it differs, but I don’t you asked about self-reinforcing cycles, and I don’t see that occurring at this point. I don’t see that kind of distress developing anywhere that I’m aware of.

Q: Thank you, Jeff Stein, with the Washington Post. You know, the polling shows that most Americans feel like we’re in a recession. Why have this drawn-out semantic battle? You know, the administration has been on the offensive to define a recession a certain way. Why have this semantic battle especially when so many Americans feel like they were misled last year, especially given the chance that things could again change, and we could actually have a recession by the definitions that you’re outlining. Why has this become this battle? 
Secretary Yellen: So, I agree with you, and I think we should avoid a semantic battle. I’ve tried to do that in my remarks today. When you say that Americans are very concerned about the economy, I think their biggest concern is with inflation and high prices that they feel they can’t afford to put gas in their gas tank, and people are worried about their retirement savings and whether or not they’ll have enough to retire. Now, sometimes people use the word recession to refer to that, that’s really about inflation, but I think that the discomfort that households feel, it’s not because of the job market– jobs are readily available, and most Americans feel good about their employment prospects, layoffs have been low. They may, some may worry that the economy, that the labor market will weaken, but I think the biggest burden that’s weighing negatively on household sentiment is inflation, and that’s why that is our top priority in terms of addressing that. 

I, you know, I see, when you look at the economy, the official arbiter of what is a recession is going to be the National Bureau of Economic Research – they’ll decide it sometime in the future. So, I think what we can constructively do is talk about what is the state of the economy. And as I’ve tried to describe, the labor market remains exceptionally strong. That is not what we see in past episodes that the NBER has labeled to be recession. On the other hand, we do see significant slowdown in growth. That’s to be expected given how rapidly the economy grew when it was recovering from the pandemic and all of those job losses, and policy was designed to do that. We should expect to see a slowdown. This economy is at full employment. So, we have a slowing economy. We have a whole variety of risks to the outlook that I’ve tried to enumerate, but we have great strengths in the economy, too– a strong labor market being one strength. You know, consumer household balance sheets remain generally quite strong. Credit quality is strong. You do not see some increase, significant increase in business bankruptcies. The typical kinds of distress we associate with the word recession. But I agree, we shouldn’t just get involved in the semantics. Let’s talk about what’s going on. 

Thank you.