Federal Reserve Chair Jerome Powell on Wednesday voiced an optimistic message concerning the U.S. economic system and downplayed the specter of a recession.
“The U.S. economic system has really been fairly resilient,” Powell mentioned in Sentra, Portugal, at a conference organized by the European Central Financial institution.
Whereas acknowledging {that a} recession is “definitely potential,” he mentioned such an final result is “not the most definitely case.”
“The economic system is resilient and nonetheless rising, albeit at a modest tempo,” he added.
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The remarks arrived two weeks after the Federal Reserve paused its aggressive sequence of rate of interest hikes, ending a string of 10 consecutive price will increase that stretched again 15 months.
The Federal Reserve has aimed to roll again value will increase by slowing down the economic system and slashing client demand. The strategy, nonetheless, dangers tipping the economic system right into a recession.
Inflation has fallen considerably from a peak final summer season however stays at a stage double the Federal Reserve’s goal of two%.
Knowledge launched in latest months means that the coverage strategy has succeeded in slowing financial exercise whereas averting a downturn.
U.S. gross home product grew by a sluggish 1.1% annualized price over the three months ending in March, based on authorities information.
Shopper spending and hiring, in the meantime, have remained stable.
MORE: Federal Reserve pauses rates of interest after 15 months of hikes
A jobs report earlier this month confirmed that the labor market grew robustly in Might, including 339,000 jobs in comparison with Wall Avenue estimates of simply 195,000.
“The labor market is basically pulling the economic system,” Powell mentioned. “It is a very robust labor market.”
Regardless of continued energy, labor market development has slowed from its earlier breakneck tempo, suggesting that demand for staff has waned and in flip employers have confronted much less strain to supply excessive wages, Powell mentioned.
A slowdown of wage will increase provides hope for the inflation battle, he added.
“We’re getting the softening we’d like,” Powell mentioned. “We’re getting it slower than anticipated but it surely’s nonetheless occurring.”
“For my part, the least unlikely case is that we do discover a method to higher steadiness with out a extreme downturn,” he added.
Supply: abcnews.go.com