Fed chair Jerome Powell: No sign of stagflation in US economy
Even as inflation remains stubbornly high and some signs of slowing growth emerge, today's economy can't be compared to the problems of the 1970s, Powell said.
https://www.nbcnews.com/news/amp/rcna150275May 1, 2024, 4:31 PM EDT
By Rob Wile
Federal Reserve Chair Jerome Powell said Wednesday there was no sign of stagflation in the economy, even as inflation remains stubbornly high and some signs of slowing growth have started to emerge.
In remarks following the release of the Fed's decision Wednesday to leave interest rates unchanged, Powell said he didn't "really understand where talk of a stagflation scenario is coming from" given the preponderance of solid economic data.
Historically, stagflation occurs when high unemployment, slow economic growth, and high inflation all happen at the same time.
Powell compared today's economy, with both inflation rates and the unemployment rate below 4%, to the 1970s, the decade when most economists consider stagflation to have taken root.
“I don’t see the stag, or the 'flation,” Powell said.
So far, most economists agree with Powell's assessment. In a note to clients last week simply titled "No sign of 'stagflation,'" Bank of America analysts said the lower-than-expeted GDP report for the first quarter was mostly a function of accounting, and not softening underlying demand.
"Consumer spending ... remains resilient," the analysts said — though it is likely that that spending is helping keep inflation rights high, they added.
"We think that view [of growing stagflation] is misguided," they wrote.
