Federal Reserve Board Chairman Jerome Powell testifies before the Senate Banking Committee in a hearing on the semi-annual monetary policy report to Congress on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas
(Reuters) – Federal Reserve Chair Jerome Powell on Wednesday reiterated his confidence in the sustainability of the record-long U.S. economic expansion, now in its 11th year.
“There’s no reason why the current situation of low unemployment, rising wages, high job creation – there’s no reason why it can’t go on,” Powell told the Senate Banking Committee in his second day of congressional testimony. “There is nothing about this economy that is out of kilter or imbalanced.”
Powell’s confidence in the outlook for continued economic growth underscored the central bank’s view that its current target range for short-term borrowing costs, between 1.5% and 1.75%, is the right setting to keep the expansion on track. Wages are now growing at about a 3% pace, the unemployment rate is 3.6% and job growth has more than kept up with an increase in the workforce.
But he also noted a number of areas where the economy’s performance is falling short, including wealth and income inequality, and labor force participation that, while rising, is lower than in many other advanced economies. Asked why, Powell pinned much of the blame on low educational attainment.
Powell also called out for the second day his concerns about the rise in U.S. debt. “I would say, be concerned now,” he said. With debt to GDP growing quickly, he said, “what it means is, 20 years from now …our children will be spending those tax dollars on servicing the debt, rather than on the things they really need.”
(Graphic: Powell no stranger on the Hill – here)
Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Andrea Ricci