If Fed chair Jerome Powell is right, the Fed might be able to keep a recession at bay — even if it’s just for a little bit longer. KevinTDugan writes
Photo: Drew Angerer/Getty Images The economy doesn’t make a whole lot of sense, does it? For every good piece of data out there — unemployment near multigenerational lows, consumers increasing spending — there’s something else — inflation at multigenerational highs, consumers decreasing spending — to cancel it out. Depending on how you look at it, and politics has quite a lot to do with it, things are going fine or collapsing.
So when Fed chair Jerome Powell answered questions at a press conference today, he did, at some minimum level, make things a little bit clearer for those who are confused by the state of the world. “I do not think the U.S. is currently in a recession,” he said. “And the reason is there’s just too many areas of the economy that are performing too well,” he added, referencing the labor market specifically: 2.
The question of whether the U.S. is currently in a recession has taken on greater urgency since the first quarter saw a decline in gross domestic product and the following three months were a period of rising inflation. Powell seemed to not take that much stock in the negative GDP print and noted that those numbers change all the time.
Colloquially, two-quarters of negative GDP growth has meant a recession, but that isn’t an ironclad rule. Still, recessions are in a large part about perception. When the Fed decided to go hard last month and raise rates by three-quarters of a point, they did so in part because of a surprisingly gloomy consumer-sentiment survey.
After Powell’s presser, the Dow Jones Industrial Average rose more than 400 points. Some, like hedge-fund billionaire Bill Ackman, had hoped that he would make a stronger statement about tamping down inflation, but if anything, Powell went in the opposite direction, saying that they wouldn’t give out as much information to the public as they have been as the central bank charts its next move.
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