In a recent conference in San Francisco, Federal Reserve Chair Jerome Powell stated that the U.S. economy is in good shape with strong growth and no signs of an imminent downturn. This positive outlook contradicts the expectations of many economists who had predicted a recession by the end of 2022.
Despite multiple interest rate hikes by the Fed to combat inflation, the labor market has remained robust. In February, the economy added 275,000 jobs and the unemployment rate was at 3.9 percent, marking a long streak with unemployment below 4 percent since the late 1960s. The U.S. economy has exhibited surprising resilience over the past year and a half, avoiding the recession that was anticipated.
At its recent meeting, the Fed chose to keep its baseline interest rate unchanged at 5.25 to 5.5 percent, a rate that has been constant since last summer. Powell maintains that more positive economic data is necessary before considering rate cuts. Inflation measures have decreased, with one index falling from 9.1 percent in June 2022 to 3.2 percent. Despite this progress, Powell acknowledges that inflation is still higher than desired and the future trajectory remains uncertain.
Although there was a slight increase in the personal consumption expenditures (PCE) price index last month, Powell stated that it is comparable to expectations. The data indicated a 0
