Should we be thankful that the U.S. economy is sputtering along with just 2% growth, a level so low that a decade ago it would have been a sign of recession?
Fed Chair Jay Powell thinks so. His reasoning is straightforward. If we’re not enjoying strong growth, then there’s no reason to expect the economy to implode. That sentiment is a bit underwhelming. But Powell did point out that, when it comes to economics, we’re the best house in a bad neighborhood.
In hist testimony to Congress, Powell said:
“The U.S. economy is the star economy these days. We’re growing at 2%, right in that range, more than any of the other advanced economies are growing. There’s no reason that can’t continue.”
Asked if there were any excesses that threatened to torpedo the expansion, Powell said:
“Look at today’s economy. There’s nothing that’s really booming that would want to bust in other words. It’s a pretty sustainable picture.”
When asked about weakness in manufacturing and problems with global growth, Powell noted that 70% of economic spending comes from consumers. With unemployment low and wages edging higher, the U.S. economy appears solid.
His comments were seen as part of a multi-pronged approach by Fed members to telegraph that they intend to hold rates steady at their December meeting.
As for the U.S. economy continuing on the current path, there’s no economic rule that demands we have a boom before we have a bust. All it takes is a turn in consumer confidence, which can be triggered by many things.