Federal Reserve Chairman Jerome Powell said Tuesday that the U.S. economy is in a “very good place,” and shrugged off concerns over a recession and the impact of the coronavirus.
In testimony to the House Financial Services Committee, Powell said he does not believe markets are at risk of talking themselves into a recession.
“I don't think so and I certainly hope not,” Powell said. “There’s no reason why the expansion can’t continue. There’s nothing about this expansion that is unstable or unsustainable."
Powell said the U.S. economy is in a “very good place,” pointing to job creation and moderate growth in a sluggish global growth environment. Despite weak manufacturing numbers, Powell said trade-related uncertainties have “diminished.”
But Powell said he is still “carefully” watching the risks of the coronavirus outbreak to the U.S. economy, adding that the negative impacts on the Chinese economy will “very likely” have some spillover effects on the U.S. economy.
President Donald Trump turned again to Twitter to bash Powell mid-testimony, blaming the Fed for the Dow Jones Industrial Average slipping off of its intra-day highs. He reiterated his call for negative interest rates, an idea that Powell has pushed back against.
The Fed appears poised to hold rates steady at the current range between 1.5% to 1.75%, insisting that only a “material” change in the outlook would push the Fed to make a move on rates.
Powell said the coronavirus-related impacts on the U.S. economy would have to be “persistent” for the Fed to deem it a material change.
Powell said he has confidence in the Chinese response to the outbreak.
“The People's Bank of China has done a number of things to support economic activity and I think you can expect the Chinese government to do a lot of things to support economic activity,” Powell said.
Powell’s testimony is the first of back-to-back days of appearances on Capitol Hill. On Wednesday, Powell is set to testify to the Senate Banking Committee at 10 a.m. ET.