Federal Reserve Chairman Jerome Powell said Tuesday that recent market volatility and higher long-term interest rates would not hurt the economy.
Feb. 27 (UPI) — Federal Reserve Chairman Jerome Powell said Tuesday that recent market volatility and higher long-term interest rates would not hurt the economy.
During his testimony on Capitol Hill, Powell said the job market remains robust and consumer spending would remain solid despite a likely drift upward in consumer prices.
« After easing substantially during 2017, financial conditions in the United States have reversed some of that easing, » Powell told the House Financial Services Committee in his first congressional testimony since he was sworn in earlier this month.
« At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong. »
Although the market plummeted earlier this month, Powell said the Fed didn’t see these developments « weighing heavily on the outlook for economic activity, the labor market and inflation. »
The economy grew 3 percent at an annual rate in the second half of last year — easily beating the average 2.1 percent pace throughout the eight-year recovery, Powell added.
« Economic growth in the second half of 2017 was led by solid gains in consumer spending, supported by rising household incomes and wealth, and upbeat sentiment, » the Fed chairman said. « In addition, growth in business investment stepped up sharply last year, which should support higher productivity growth in time. »
The unemployment rate has also fallen to a 17-year low of 4.1 percent and monthly job growth averaged 179,000 during the second half of 2017.
« Strong job gains in recent years have led to widespread reductions in unemployment across the income spectrum and for all major demographic groups, » Powell said.
