Sunday , December 8 2019
Home / Mish's Global Economic / Powell Says “Day of Reckoning” Far Off

Powell Says “Day of Reckoning” Far Off

Summary:
At the semi-annual Congressional economic testimony, Fed Chair Jerome Powell was singing the praises of the US economy. Despite serious economic headwinds and unsustainable US spending, Powell Says he Doesn’t See a ‘Day of Reckoning’ Coming for the US Anytime Soon. “If you look at today’s economy, there’s nothing that’s really booming now that would want to bust,” Powell said in testimony before the House Budget Committee. “In other words, it’s a pretty sustainable picture.” He added that the dollar’s status as the global reserve currency is helping forestall any trouble from the nation’s growing debt load, which just surpassed trillion. “We are the strongest country, we have the best institutions, we have the best labor force,” he said. “We have such strengths, and I think possibly

Topics:
Mike Shedlock considers the following as important:

This could be interesting, too:

Mike Shedlock writes All Aboard the “No Recession” Train

Mike Shedlock writes Toilet Wars: Trump Asks EPA to Review the Flush

Mike Shedlock writes Huge Difference Between GDPNow and Nowcast Models

Mike Shedlock writes Trump Tweets “Manufacturing Blowout”: What’s the Real Story?

At the semi-annual Congressional economic testimony, Fed Chair Jerome Powell was singing the praises of the US economy.

Despite serious economic headwinds and unsustainable US spending, Powell Says he Doesn’t See a ‘Day of Reckoning’ Coming for the US Anytime Soon.

“If you look at today’s economy, there’s nothing that’s really booming now that would want to bust,” Powell said in testimony before the House Budget Committee. “In other words, it’s a pretty sustainable picture.”

He added that the dollar’s status as the global reserve currency is helping forestall any trouble from the nation’s growing debt load, which just surpassed $23 trillion.

We are the strongest country, we have the best institutions, we have the best labor force,” he said. “We have such strengths, and I think possibly the day of reckoning could be quite far off.”

Powell said the nature of expansions now is to last longer than they have in the past.

“We think that really is because we are no longer facing high and volatile inflation,” he said. “What we’ve seen is three of the four longest business cycles in U.S. recorded history have been quite recent.”

He did issue warnings about several dangers such as a manufacturing slowdown and trade headwinds, and he again called the path of government debt unsustainable. The national debt is expanding at a faster pace than economic growth.

“I think by definition that makes it unsustainable,” Powell said of the debt.

Questions of the Day

  1. Did the US have the strongest economy, best labor force, and best institutions in 1929, in 2000, and in 2007?
  2. Did that stop the Great Depression, the Dot-Com bust, or the Great Recession?

1A: Yes, Yes, Yes

1B: No, No, No

Solving the problem, will require the economy growing faster than the debt, “and you have to do that for 10 or 20 years,” said Powell.

Apparently, that's the plan.

Besides, “There’s no sign that things are overheating or anything like that,” Powell said.

Good luck with that.

Also note: Good Reason to Expect Recession: Greenspan Doesn't

Mike "Mish" Shedlock

Mike Shedlock
Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Leave a Reply

Your email address will not be published. Required fields are marked *