Feb. 27 (UPI) — Federal Reserve Chairman Jerome Powell said Tuesday that recent market volatility and higher long-term interest rates would not hurt the economy.
During his testimony on Capitol Hill, Powell said the job market remains robust and consumer spending would remain solid despite a likely drift upward in consumer prices.
“After easing substantially during 2017, financial conditions in the United States have reversed some of that easing,” Powell told the House Financial Services Committee in his first congressional testimony since he was sworn in earlier this month.
“At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong.”
Although the market plummeted earlier this month, Powell said the Fed didn’t see these developments “weighing heavily on the outlook for economic activity, the labor market and inflation.”
The economy grew 3 percent at an annual rate in the second half of last year — easily beating the average 2.1 percent pace throughout the eight-year recovery, Powell added.
“Economic growth in the second half of 2017 was led by solid gains in consumer spending, supported by rising household incomes and wealth, and upbeat sentiment,” the Fed chairman said. “In addition, growth in business investment stepped up sharply last year, which should support higher productivity growth in time.”
The unemployment rate has also fallen to a 17-year low of 4.1 percent and monthly job growth averaged 179,000 during the second half of 2017.
“Strong job gains in recent years have led to widespread reductions in unemployment across the income spectrum and for all major demographic groups,” Powell said.
