Powell says he doesn’t see a ‘day of reckoning’ coming for the US anytime soon

Federal Reserve Chairman, Jerome Powell, has said on Thursday that despite the current increase in corporate and government debt, he does not see the economy bubbling with disastrous energy and trillion-dollar deficits. He mentioned in testimony before the House Budget Committee, that in today’s economy, nothing is booming, and so nothing would go bust. In other words, it is a sustainable scenario.

He also said that the rate at which the dollar will fare against other currencies will tell whether trouble for the nation is coming or not. The total debt load of the nation has increased to over $23 trillion. As a strong nation with amazing institutions and a workforce which delivers, the day of reckoning for the economy is still far away.

The chief of the central bank replied to a question asking whether he sees irrational exuberance in financial markets and the fiscal picture painted by the government. Just as Federal Chairman Alan Greenspan had predicted a similar fate for the economy in 1996.

As of now, corporate debt has reached $6.5 trillion which is double the amount it was when the financial crisis was going on. This is being described as the longest period of growth for the US economy. Powell said that the nature of expansions now is to last longer than they did in the past. This is because high and volatile inflation has ceased.

However, he issued a warning about the dangers of manufacturing industries facing slowdown and headwinds. He also called the government debt unsustainable and spoke of the ill effects of the national debt which is increasing faster than economic growth in the nation.

He said that by definition, this means that the US scenario is unstable and unsustainable. The prediction is that in another 10-20 years, this problem needs to be solved so that our grandchildren and children do not end up paying large sums in order to repay interest on the borrowings of their ancestors.

 


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Terry McKinney

Terry McKinney is the writer who is in charge of the Business news section at Instanews247. He is a business grad, who has a knack for trend analysis and change forecasting. His unique skills set him apart from any other business writers in the business, and solidify him as an asset to our team. Business news makes a deep impact on transmitting all the Wall Street action going down at top business houses, by making the details which would otherwise be unavailable, available to readers – and at Instanews247, we have Terry to thank for it!
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