Federal Reserve Chairman Jerome Powell sees the economy’s outlook as “remarkably positive,” but warned Tuesday that the central bank remains alert for rising prices that often accompany low unemployment.
Powell spoke Tuesday in Boston before the National Association for Business Economics.
Inflation has remained steadily near the Fed's 2 percent goal that the Fed, despite increased employment. The Fed also recently revised up its forecast for economic growth in 2018, which, if it holds true, would give President Trump a major victory.
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Powell said the ‘natural rate’ of unemployment may be inherently lower than it has been in the past, opening up the possibility that economic factors other than employment could be more significantly affecting the price of goods and the price of the dollar than they may have in the past.
The central bank chairman noted a recent survey by the National Federation of Independent Business, a small business group, that listed “quality of labor” as the most important problem businesses now face, in contrast to “poor sales” topping the list in past surveys.
That survey result, and other Fed data Powell cited, supported the overall rosy picture Powell painted of the economy.
“Many of us have been looking back recently on the decade that has passed since the depths of the financial crisis. In light of that experience, I am glad to be able to stand here and say that the economy is strong, unemployment is near 50-year lows, and inflation is roughly at our 2 percent objective,” said Powell. “The baseline outlook of forecasters inside and outside the Fed is for more of the same.”