In a recent conference in San Francisco, Federal Reserve Chair Jerome Powell reiterated that the U.S. economy is not on the brink of a recession. Despite concerns about inflation and interest rate hikes, Powell emphasized that the economy is in a strong position and there is no evidence to suggest a recession is imminent.
Over the past year and a half, the U.S. economy has exceeded expectations and managed to avoid the recession that many economists had predicted for the end of 2022. This has been described as a “soft landing” by experts, with inflation decreasing significantly without causing a severe economic downturn. The consumer price index (CPI) dropped from 9.1 percent in June 2022 to 3.2 percent, showing resilience despite multiple interest rate hikes by the Federal Reserve to curb inflation.
The labor market has also shown resilience, with 275,000 jobs being added to the economy in February alone, maintaining an unemployment rate of 3.9 percent, which is the longest sub-4 percent streak since the late 1960s.
While some have expressed concern about personal consumption expenditures (PCE) price index showing a slight increase last month, Powell stated that this was within expectations. The data revealed a 0.3 percent rise over the previous month and a 2.5 percent increase year-over-year in February.
Powell emphasized that while there may be some volatility along the way, he anticipates a gradual decline in inflation and believes that positive economic data will be needed before considering any rate cuts.
Overall, Powell’s message at this conference was clear: while there are concerns about inflation and interest rates hikes, there is no indication that a recession is imminent at this time.
