Fed Thoughts: Back to the Future?

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Fed Thoughts March 2018

Vincent Reinhart

Vincent Reinhart - Chief Economist & Macro Strategist

One month into the job, Federal Reserve (Fed) Chair Jerome Powell must be wondering what more is in store. Stock market correction, check, bipartisan (actually, partisan from both sides of the aisle) interrogation on Capitol Hill, check, and policy interventions on international trade by the president who appointed him, check. In the event, Chair Powell conveyed a balanced and relaxed demeanor in his February Congressional appearances when delivering the semiannual report on monetary policy.

Indeed, Chair Powell was so relaxed we are thinking about applying the soon-to-be-trademarked J-Pow! to spice up his image.

Three points emerged from his two-day grilling from what seems so long ago.

First, Chair Powell readily admitted that events since the Fed reported the economic projections of FOMC participants in December had firmed up the outlook for real growth. The administration added to budget stimulus, foreign growth picked up, and US data ran strong. The employment situation for February piled more fuel on that latter fire, with 313,000 jobs created, on net, to pull the twelve-month average near 200,000. A hot labor market pulls in new workers, though, and for the fifth month in a row, the unemployment rate held at 4.1 percent.

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