Despite serious economic headwinds and unsustainable US spending, Powell Says he Doesn’t See a ‘Day of Reckoning’ Coming for the US Anytime Soon.
“If you look at today’s economy, there’s nothing that’s really booming now that would want to bust,” Powell said in testimony before the House Budget Committee. “In other words, it’s a pretty sustainable picture.”
He added that the dollar’s status as the global reserve currency is helping forestall any trouble from the nation’s growing debt load, which just surpassed $23 trillion.
“We are the strongest country, we have the best institutions, we have the best labor force,” he said. “We have such strengths, and I think possibly the day of reckoning could be quite far off.”
Powell said the nature of expansions now is to last longer than they have in the past.
“We think that really is because we are no longer facing high and volatile inflation,” he said. “What we’ve seen is three of the four longest business cycles in U.S. recorded history have been quite recent.”
He did issue warnings about several dangers such as a manufacturing slowdown and trade headwinds, and he again called the path of government debt unsustainable. The national debt is expanding at a faster pace than economic growth.
“I think by definition that makes it unsustainable,” Powell said of the debt.
Questions of the Day
- Did the US have the strongest economy, best labor force, and best institutions in 1929, in 2000, and in 2007?
- Did that stop the Great Depression, the Dot-Com bust, or the Great Recession?
1A: Yes, Yes, Yes
1B: No, No, No
Solving the problem, will require the economy growing faster than the debt, “and you have to do that for 10 or 20 years,” said Powell.
Apparently, that's the plan.
Besides, “There’s no sign that things are overheating or anything like that,” Powell said.
Good luck with that.
Mike "Mish" Shedlock