Things won't be so expensive next year, Janet Yellen says — and Americans will be able to 'feel good about their finances and their personal economic situation'

• Treasury Sec. Janet Yellen told 60 Minutes she's hopeful prices will substantially decrease next year.
• She said that while there's risk of a recession, it's not needed to bring inflation down.
• Her comments come ahead of another likely interest rate hike from the Fed this week.

The nation's top Treasury official sees things looking up for Americans in the new year.

On Sunday, US Treasury Secretary Janet Yellen appeared on CBS' 60 Minutes to chat about where she sees the economy headed, including the outlook on inflation and the labor market. While recent economic data show signs that the economy is headed in the right direction — the country added 263,000 payrolls in November — prices remain high, and the Federal Reserve has chosen to aggressively fight inflation by hiking interest rates, which some lawmakers worry could trigger a recession.

Yellen said that while there is a risk of a recession, she's hopeful that Americans will not feel a strain on their wallets for much longer.

"I believe inflation will be lower," Yellen said. "I am very hopeful that the labor market will remain quite healthy so that people can feel good about their finances and their personal economic situation."

"There's a risk of a recession," she added. "But it certainly isn't, in my view, something that is necessary to bring inflation down."

—60 Minutes (@60Minutes) December 12, 2022

Yellen noted that gas prices and shipping costs have come down while the labor market is remaining strong, which is why she thinks that by the end of next year, there will be a "substantial reduction in inflation" as long as there isn't an "unanticipated shock."

Her comments come ahead of the Federal Open Market Committee (FOMC) meeting on Wednesday, where the Federal Reserve is expected to announce yet another interest rate hike. For the past four meetings, the Fed has hiked interest rates by 0.75 percentage points — the most aggressive tactic the nation's central bank has taken so far to combat inflation. 

While Fed Chair Jerome Powell indicated that the increases could slow at this December meeting, he cautioned that the increases will persist so long as inflation remains high.

"It is likely that restoring price stability will require holding policy at a restrictive level for some time," Powell said at a Brookings Institution event in November. "History cautions strongly against prematurely loosening policy. We will stay the course until the job is done."

Both Yellen and Powell have previously said that they think it is possible for the US to fight inflation while avoiding a recession, also known as a soft landing. But even if the US does find itself in a recession next year, Insider previously reported that it probably won't be as bad as many people might expect and take the form of a growth recession, in which the economy experiences a shallow economic downturn while maintaining a strong labor market.

For now, lowering prices for Americans appears to be at the top of those officials' agendas.

"We're all aware that it's critically important that inflation be brought under control and not become endemic to our economy," she added. "And we're making sure that that won't happen."