Why Fed Chairman Powell Says Not to Worry about the Economy
There is no indication of a recession and no need to change up the monetary policy, says Jerome Powell, who serves as chairman for the Federal Reserve.
Even though the new tariff policies from President Donald Trump have radically affected the stock market and caused prices to soar while stocks drop, Fed Chairman Powell says that consumers and investors do not have to be worried just yet.
The long-term impact of the new tariff policies has yet to be felt, but for now, Powell says there is no immediate need to change up the current Federal Reserve policy on interest rates. He says that the economy is solid at the moment, even with the changes to federal budgeting and tariffs. The labor market is in a healthy place right now, and inflation is actually getting better. What these factors indicate to Powell is that the economy is quite resilient.
Powell made these statements at a conference for the Society for Advancing Business Editing and Writing. He noted that inflation was down considerably from its high point in 2022, although he conversely pointed out that the Fed has a 2% target for inflation, and progress toward that goal has been slow. Unemployment is at a healthy place, right now, he said, and the economy is showing signs of growth. Employment potential is being realized, he commented, which always indicates an economy that is on strong footing.
The Stock Market Picture
Over the last few months, the stock market has swiftly declined. There have been some upward spikes recently as some of the tariff policies have been paused or reversed, but the overwhelming trend in recent months has been for the stock market to be bearish.
Since Trump’s election, the Nasdaq Composite has fallen from about 19,500 points to 16,700 points. In the same 3-month period, the S&P 500 has dropped from 5,950 to 5,360. The Dow Jones has fallen as well, losing about 3,000 points as it has gone from 43,000 to 40,200 in three months.
Investors should bear in mind, however, that the stock market is not the sole indicator of the economy’s performance. About 62% of American own stock, which would seem to make stock movement a good indicator of the overall economy. However, only about 15% of Americans own stock directly. The remainder are primarily given stocks by their employers and never do anything with it. This means that only a small percentage of Americans are actively trading and doing anything with their stocks. So, when the stock market plummets, but the Fed chairman says the economy still looks good, he is looking outside the market for obvious reasons.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals