Friday July 19, 2024

Federal Reserve's Jerome Powell rules out recession in US economy

Federal Reserve's Jerome Powell dismisses recession concerns and highlights US economy's strength

By Web Desk
March 30, 2024
American economy evades recession despite earlier predictions. — Bloomberg/File
American economy evades recession despite earlier predictions. — Bloomberg/File

Jerome Powell, the chair of the Federal Reserve, ruled out the possibility of a recession in the economy of the United States in the near future, saying that there is no reason to believe it.

Addressing a conference in San Francisco, Powell said, “Growth is strong. The economy is in a good place. There is no reason to think the economy is in a recession or is at the edge of one.”

Jerome Powell reiterated that the Federal Reserve anticipates inflation to gradually decrease, albeit with occasional bumps along the way. He argued that the most recent figures were “pretty much in line with our expectations.”

The American economy has surprised many over the past year and a half by not going into a recession that many economists predicted at the end of 2022.

Inflation, as measured by the Consumer Price Index (CPI), has decreased significantly without causing big economic problems. Inflation reached a peak of 9.1% in June 2022. But, it has since dropped to the current 3.2%.

The American job market also remains strong, even though the Federal Reserve has been raising interest rates to control inflation.

Last month, 275,000 jobs were added to the US economy with the unemployment rate standing at 3.9%, continuing a streak of sub-4% unemployment not seen since the late 1960s.

The Federal Reserve recently decided to maintain its baseline interest rate in the range of 5.25 to 5.5%. The baseline interest rate has been like this since last summer.

Addressing a press conference last week, Powell said that they want to see more positive data before they decide to lower interest rates.

“Inflation has eased substantially while the labor market has remained strong. And that is very good news,” Powell said.

“But inflation is still too high. Ongoing progress in bringing it down is not assured. And the path forward is uncertain.”