Fed’s Powell Says U.S. Economy Is Solid but Rest of the World Is Slowing Down

Fed's Powell unsettles markets - again

The principal threat to economic growth in the United States is the economic slowdown in so many other parts of the world, Federal Reserve chairman Jerome Powell said Thursday.

During a lunchtime appearance at the Economic Club of Washington, D.C., Powell sounded optimistic about the U.S. economy but cautioned that it was unclear whether slowdowns in Asia and Europe could become a drag on the U.S.

“The U.S. economy is solid,” Mr. Powell said. “The principal worry I would have is global growth. The question would be how much does that affect us.”

Powell pointed out that the U.S. may be more vulnerable to a slowdown in global growth because of the rise on globalized business and supply chains.  Slower than expected iPhone sales in China recently knocked the price of Apple’s stock down by as much as 10 percent.

The Fed chair also said the slowdown in China specifically “is a concern, is something we’re watching.” He brushed off the idea that tariffs were having a bit impact on either the U.S. economy or China’s, saying trade disputes had not left a “visible mark” on the economies of either country.

One of the principal goals of Powell’s appearance was to continue to reassure markets that the Fed would not act rashly when raising rates and to communicate that the central bankers are closely monitoring the economy and markets. Powell and several other Fed officials have recently begun stressing the idea that the Fed can afford to be “patient” when it comes to raising rates because inflation is so low.

“We are in a place where we can be patient and flexible and see what does evolve,” Powell said.



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