If Federal Reserve Chairman Jerome H. Powell’s testimony to a Congressional panel Tuesday were covered by a celebrity magazine the title might be: “Fed Head Jay Powell–He’s Just Like Us!”
The new Fed chief told the House Financial Service Committee that he has become more optimistic about the U.S. economy this year, a view that is shared by many of his fellow Americans. Earlier in the day, the Conference Board said consumer sentiment had risen for the second straight month in February.
“My personal outlook for the economy has strengthened since December,” Powell said. “I would expect the next two years on the current path to be good years for the economy.”
Powell said that the labor market and business investment have continued to strengthen this year. Headwinds that once held back growth have turned into “tailwinds” that boost growth.
He emphasized that he plans to continue the policy of his predecessor, Janet Yellen, who committed the Fed to a policy of gradual rate increases dependent on economic data. Importantly, Powell appeared to signal that the Fed stood ready to bolster strong economic growth rather than stymie it.
Powell was sworn in as Fed chairman earlier this month. His testimony on Tuesday was his first as head of the Fed. On Thursday, Powell will testify before a Senate panel.
Powell declined to comment on a number of “hot button” issues, including DACA and fiscal policy. But his comments did appear to dispell any remaining notion that the Fed would attempt to offset additional growth generated by tax cuts with faster rate hikes.
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