Powell Says Economy Is ‘Strong’ But Prosperity Missing Some Places
(Bloomberg) -- Federal Reserve Chairman Jerome Powell said the U.S. economy is “strong” with low risk of a recession, though the expansion’s benefits haven’t been felt evenly across the country.
“Today, data at the national level show a strong economy,” Powell told students Tuesday at Mississippi Valley State University. “Unemployment is near a half-century low, and economic output is growing at a solid pace.”
Speaking in Itta Bena, Mississippi, located in Leflore County where unemployment at 7.3 percent in December was almost double the national average, Powell said “we know that prosperity has not been felt as much in some areas, including many rural places.” The central bank can help by delivering on its goals for price stability and full employment, he said.
It was the first visit by a Fed chairman to the nation’s second-poorest state in at least 20 years, and the man introducing Powell said he was the most important visitor to the Mississippi Delta region since Bobby Kennedy in the 1960s.
The Fed signaled last month that it’s done raising interest rates for at least a while and will be flexible in reducing its bond holdings. The sweeping pivot by the Federal Open Market Committee from a bias toward tighter monetary policy at the end of last year helped spark a broad-based upswing in financial markets.
In remarks earlier to students, Powell said that officials “don’t feel the probability of recession is at all elevated.’’
U.S. growth was strong in 2018 but is expected to slow somewhat this year as the global economy cools and as the stimulus from U.S. tax cuts and government spending increases fade. Still, the labor market remains robust with unemployment of 4 percent near the lowest levels since the 1960s.
The central bank raised borrowing costs four times last year and the target range for its benchmark policy rate of 2.25 percent to 2.5 percent has now reached the range that policy makers estimate to be neutral that neither spurs nor slows growth. Investors are leaning towards the Fed’s next move being a cut, according to pricing in interest-rate futures contracts.
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