- Fed Chair Jerome Powell speaks about the US economy at the Economic Club of New York.
- Powell states that inflation is still too high and leaves the possibility of another interest rate increase in December.
- Despite the Fed’s efforts to control inflation through rate hikes, the US economy continues to thrive.
- Recent reports show strong job growth, high consumer spending, and a surge in Americans’ wealth.
- The economy is still surpassing expectations and experiencing robust growth.
- Powell acknowledges the uncertainties and risks in the current situation, including geopolitical tensions.
In a closely watched speech at the Economic Club of New York, Fed Chair Jerome Powell addressed the US economy and its recent performance. Despite the Fed’s efforts to tame inflation through interest rate hikes, Powell declared that “inflation is still too high.” He left the door open for another rate increase in December, although he effectively ruled one out at the central bank’s November meeting.
In the last 20 months, the Fed has implemented a series of rate hikes to curb soaring inflation. This strategy has proven successful, as inflation has come down to about half of its June 2022 peak. However, despite the expectation that the rate hikes would slow down hiring, spending, and overall economic growth, recent reports show that the US economy is still booming in the ’20s.
- Jobs: The September job numbers exceeded expectations, with employers adding 336,000 jobs. The unemployment rate remains low at 3.8%, indicating a resilient job market.
- Spending: In addition, retail sales in September surpassed estimates, suggesting that American consumers are still leading the way in the shopping world. This is further supported by the fact that Americans’ wealth surged by 37% from 2019 to 2022, according to Fed data released on Wednesday. This substantial increase is more than double the previous record.
- Economy: The strong performance of the US economy led Morgan Stanley to raise its Q3 economic growth outlook to 4.9% from 4.5%. Despite these positive indicators, Powell emphasized that none of his plans are set in stone, given the uncertainties and risks of the current situation. One of the factors impacting the global economy is the ongoing Israel-Hamas war. Powell warned that the “highly elevated” geopolitical tensions pose significant risks.
In conclusion, Fed Chair Jerome Powell admitted that the US economy is still experiencing a “hot” streak, with strong job growth, high consumer spending, and a surge in Americans’ wealth. Despite the Fed’s efforts to control inflation, the economy continues to surpass expectations and exhibit robust growth. Powell remains cautious due to geopolitical tensions and other uncertainties. Monitoring the situation and implementing appropriate measures will be essential for maintaining the stability and prosperity of the US economy.
Hot Take: While many expected the Fed’s rate-hiking extravaganza to dampen economic growth, it appears that the US economy is in no mood for hibernation. With job numbers surpassing expectations and consumer spending hitting new heights, it seems like the economy is dancing to its own tune. However, Powell’s cautionary note about geopolitical tensions serves as a reminder that even the hottest economies are not immune to risks. As the US heads into the ’20s, keeping a watchful eye on these uncertainties will be crucial to sustaining the economic momentum.
Fed Chair Jerome Powell delivered an important address at the Economic Club of New York last Thursday on the US economy and its recent performance. Despite attempts by the Fed to combat inflation through interest rate increases, Powell expressed concerns that inflation remains too high despite previous interest rate increases; leaving open the possibility of another hike at December’s central bank meeting; although he effectively ruled it out at its November gathering.
Over the past 20 months, the Fed has instituted a series of rate hikes to combat inflation. Their strategy has proven effective: inflation has fallen back down to around half its June 2022 peak level. Yet despite expectations that rate increases would hinder hiring, spending, and economic growth; recent reports reveal that our economy remains strong.
September job numbers outshone expectations with employers adding 336,000 jobs and unemployment staying low at 3.8%, indicating a healthy job market. Retail sales also exceeded estimates in September, showing American shoppers are leading the charge when it comes to shopping – further evidenced by Fed data released Wednesday showing Americans’ wealth increased 37% year-on-year between 2019-2022 – more than doubling what had previously been recorded!
Morgan Stanley increased its Q3 economic growth outlook from 4.5% to 4.9% due to the strong performance of the US economy, yet Powell made sure no plans are set in stone given the uncertainties and risks in today’s environment. One factor impacting the global economy is Israel-Hamas tensions which Powell warned pose significant risks.
As Fed Chair Jerome Powell concluded, the US economy remains on an “upswing”, with strong job creation, consumer spending and wealth increase despite efforts by the Fed to control inflation; even so, growth outshone expectations with continued robust expansion despite geopolitical tensions and uncertainties; monitoring this situation carefully will be vital for safeguarding America’s prosperity and keeping inflation at bay.
Although many expected the Fed’s rate-hiking event to slow economic growth, it appears as though the US economy is far from ready for hibernation. Job numbers have outstripped expectations and consumer spending has hit new highs; evidence that economic momentum remains strong. Powell’s cautionary note about geopolitical tensions serves as a timely reminder that even hot economies face risks; keeping an eye on these uncertainties as we head into the 20s will be key in maintaining its forward movement.