Inquiring minds are investigating Jerome Powell’s speech on his Outlook for the U.S. Economy presented today at the Economic Club of Chicago, Chicago, Illinois. Here are a few key quotes.
- After what at times has been a slow recovery from the financial crisis and the Great Recession, growth has picked up. The labor market has been strong, and my colleagues and I on the Federal Open Market Committee (FOMC) expect it to remain strong.
- Trends in participation have been more pronounced in the United States than in other advanced economies.
- There is no consensus about the reasons for the long-term decline in prime-age participation rates, and a variety of factors could have played a role. Research suggests that structurally-oriented measures–for example, improving education or fighting the opioid crisis–also will help raise labor force participation in this age group.
- The balance sheet reduction process is going smoothly and is expected to contribute over time to a gradual tightening of financial conditions. Over the next few years, the size of our balance sheet is expected to shrink significantly.
- The FOMC’s patient approach has paid dividends and contributed to the strong economy we have today.
- My FOMC colleagues and I believe that, as long as the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote these goals
- It remains the case that raising rates too slowly would make it necessary for monetary policy to tighten abruptly down the road, which could jeopardize the economic expansion. But raising rates too quickly would increase the risk that inflation would remain persistently below our 2 percent objective. Our path of gradual rate increases is intended to balance these two risks.
Not Too Fast Not To Slow
On the whole, it was an interesting speech, at least compared to the drivel from Janet Yellen on the Phillips Curve.
But here is my bottom line translation: “We really do not know what we are doing, but we are going to keep doing it.”
Rear View Mirror
The market did not seem to appreciate the beauty of that not too hot not too cold message, to say the least.
Here’s my assessment: Inflation is in the Rear-View Mirror.
Meanwhile, thanks to a hurricane boost that is clearly fading, let’s all pretend the economy is strengthening.
Mike “Mish” Shedlock
Transports are booming. Rail traffic through roof. Try and make some money next week, you will feel better. Mish get some sunshine, it’s good for you.
Prime age participation rate decline – obesity should be mentioned.
History shows that government bureaucracies have always failed to evolve quickly enough to meet the needs of the population their governance effects. This is what ails all government institutions from defense to economics. Eventually the only weapon the people at the top have left is bullshit rhetoric. The inevitable result of saying one thing to keep the minions happy while inertia keeps them doing exactly what that have always done. The problems with society and economics are institutional or structural not the fault of single presidents or any one celebrity. It’s easy to blame individuals but ultimately our “democratic” and bureaucratic system, as a string of 4-year dictatorships, is destined to corrupt and fail. People need to look at the big picture and think past the limits of constitutions, religion and tradition for lasting change.
Economy is “always picking up” (permanently).we are in “permanent recovery”.10,000 straight months of (seasonally adjusted simulated)job growth,BLS (ministry of truth)predicts ZERO unemployment “rate”,1 trillion with a T straight quarters of positive GDP growth.