In his latest testimony to the House Financial Services Committee, Federal Reserve Chairman Jerome Powell asserted his confidence in the US Economy stating that he doesn't have any reason to believe that markets are at any risk of a nearby recession. He went on to state that nothing about this continued expansion and growth seems unstable or unsustainable. He even believes that concerns over the trade war with China have "diminished".
However, Powell stated he is watching the potential risks of the coronavirus outbreak to the US Economy carefully and believes that it is very likely that the slowdown caused by the virus on the Chinese economy could have some carryover to the US. With that being said, Powell still wants to hold back from taking any action until the coronavirus impact is persistent.
Do you think Powell and the Fed are right being so confident in the economy right now? Should he be proactive in fighting the impact of the coronavirus on the US economy?
https://finance.yahoo.com/news/powell-testimony-february-2020-us-economic-expansion-not-unstable-or-unsustainable-165916522.html
5 comments:
I believe that Powell and the Fed have all the right to be confident in the economy. This growth has been quite intense over the recent years, but I would feel that rather than a recession, I expect to see declining growth over the next few years. The economy of the US will remain a positive one, but not nearly as intense as the growth was recently. This also may be effected by the Corona virus outbreak, a virus I think was drastically under-reported on by the media and China, and that the true impact of it was not given by Chinese officials in order to make the problem not seem as bad as it truly was. This may hurt US imports from China, but also gives the US growth potential to step in where Chinese imports may be lacking.
I do agree that Powell should be more proactive when it comes to the virus from seeing how much damage it has been doing in China lately. And the confidence that he shows in the US economy does have it's merit, but with the trade war is just ending, and seeing how China has been reeling due to the corona virus, it will be important to watch how the relationship between the two nations develops from that time on.
Powell does have a right to be so confident in our economy I think because inflation is still slower than growth and unemployment is still extremely low. Every economy goes through business cycles, so when the unemployment rate rises just a little bit, I don't think it is anything to worry about from a shallow perspective. However, I do think that the fact that we have had predictions for a recession and the possibility of the coronavirus outbreak, we should be worried I think about the long term future and just keep a closer eye on the economy even if it looks fine right now.
I believe Powell's confidence in the economy also keeps confidence in consumers. The U.S. economy has been steady and strong for years when looking at growth and inflation rates. There is nothing extremely problematic right now that would warrant Powell to raise concerns or doubts to others. I think Powell holding back any action on the potential negative impact on the U.S. economy from the virus until further need is strategic and smart. There is no need to cause panic among U.S. consumers over affairs still primarily being dealt with oversees.
In my opinion, Jerome Powell and the Federal Reserve have the right to be confident in the current state of the American economy, and this is possibly due to the low levels of unemployment and inflation. Even with this confidence in the American economy, the Fed should be worried about the economic trends associated with the Coronavirus and the slowdown in global economic growth. If these economic trends continue it may be necessary for the Fed to pursue proactive economic measures, but, in the current state, it may be in the best interest of the Fed to hold back on making any policy decisions.
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