The Latest: Powell dismisses recession concerns
WASHINGTON (AP) — The Latest on Federal Reserve Chairman Jerome Powell’s testimony before the House Budget Committee on Thursday (all times local):
Fed Chairman Jerome Powell says the United States has the “star economy” in the world at the moment and there is no reason to believe a recession is imminent.
Powell, delivering a second day of congressional testimony Thursday, was pressed by some members of the House Budget Committee to forecast whether the risks of a recession are now elevated given that the country is in its 11th year of the longest economic expansion in U.S. history.
Powell said, “There is no reason to believe that the probability of a recession is elevated at this time.” He said the expectation at the Fed is for continued growth. He said a slowdown in manufacturing was being offset by strong consumer spending.
He said three of the country’s four longest economic expansions have occurred over the last four decades and one reason for that has been the elimination of periodic bouts of high inflation.
John Yarmuth, Democrat from Kentucky and chairman of the House Budget Committee, is defending the Federal Reserve from the attacks leveled by President Donald Trump.
Yarmuth on Thursday called the president’s repeated attacks on the Fed, “unacceptable and dangerous.”
Trump has called Fed officials “boneheads” and has asked which is the bigger enemy, Fed Chairman Jerome Powell or China’s President Xi Jinping.
Historically, the Fed’s independence has been respected by presidents from both parties, though many presidents have privately pressured the Fed.
Federal Reserve Chairman Jerome Powell is asking Congress to tackle the growing budget deficit.
Powell’s remarks before the House Budget Committee Thursday came a day after he told Congress’ Joint Economic Committee that the Fed was likely to keep rates unchanged in the coming months, unless there was a “material” shift in the economy’s outlook.
Powell is one of the few leading public figures urging Congress to reduce the federal government’s annual deficit, which is nearing $1 trillion.
A large deficit will make it harder for Congress to cut taxes or boost spending when the next recession hits, Powell said. That is a concern because with the Fed’s benchmark interest rate already low, the Fed also has a limited ability to respond to downturns.