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    Powell 20240930 A

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    Powell 20240930 A

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    Powell 20240930 A

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    Powell 20240930 A

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    Powell 20240930 A

    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    15 views5 pages

    Powell 20240930 A

    Uploaded by

    tyler
    Powell 20240930 A

    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    of 5

    For release on delivery

    1:55 p.m. EDT (12:55 p.m. CDT)


    September 30, 2024

    Economic Outlook

    Remarks by

    Jerome H. Powell

    Chair

    Board of Governors of the Federal Reserve System

    at the

    National Association for Business Economics Annual Meeting

    Nashville, Tennessee

    September 30, 2024


    I have some brief comments on the economy and monetary policy and look

    forward to our discussion.

    Our economy is strong overall and has made significant progress over the past

    two years toward achieving our dual-mandate goals of maximum employment and stable

    prices. Labor market conditions are solid, having cooled from their previously

    overheated state. Inflation has eased, and my Federal Open Market Committee

    colleagues and I have greater confidence that it is on a sustainable path to 2 percent. At

    our meeting earlier this month, we reduced the level of policy restraint by lowering the

    target range of the federal funds rate by 1/2 percentage point. That decision reflects our

    growing confidence that, with an appropriate recalibration of our policy stance, strength

    in the labor market can be maintained in an environment of moderate economic growth

    and inflation moving sustainably down to our objective.

    Recent Economic Data

    The labor market

    Many indicators show the labor market is solid. To mention just a few, the

    unemployment rate is well within the range of estimates of its natural rate. Layoffs are

    low. The labor force participation rate of individuals aged 25 to 54 (so-called prime age)

    is near its historic high, and the prime-age women’s participation rate has continued to

    reach new all-time highs. Real wages are increasing at a solid pace, broadly in line with

    gains in productivity. The ratio of job openings to unemployed workers has moved down

    steadily but remains just above 1—so that there are still more open positions than there

    are people seeking work. Prior to 2019, that was rarely the case.
    -2-

    Still, labor market conditions have clearly cooled over the past year. Workers

    now view jobs as somewhat less available than they were in 2019. The moderation in job

    growth and the increase in labor supply have led the unemployment rate to increase to 4.2

    percent, still low by historical standards. We do not believe that we need to see further

    cooling in labor market conditions to achieve 2 percent inflation.

    Inflation

    Over the most recent 12 months, headline and core inflation were 2.2 percent and

    2.7 percent, respectively. Disinflation has been broad based, and recent data indicate

    further progress toward a sustained return to 2 percent. Core goods prices have fallen

    0.5 percent over the past year, close to their pre-pandemic pace, as supply bottlenecks

    have eased. Outside of housing, core services inflation is also close to its pre-pandemic

    pace. Housing services inflation continues to decline, but sluggishly. The growth rate in

    rents charged to new tenants remains low. As long as that remains the case, housing

    services inflation will continue to decline.

    Broader economic conditions also set the table for further disinflation. The labor

    market is now roughly in balance. Longer-run inflation expectations remain well

    anchored.

    Monetary Policy

    Over the past year, we have continued to see solid growth and healthy gains in the

    labor force and productivity. Our goal all along has been to restore price stability without

    the kind of painful rise in unemployment that has frequently accompanied efforts to bring

    down high inflation. That would be a highly desirable result for the communities,
    -3-

    families, and businesses we serve. While the task is not complete, we have made a good

    deal of progress toward that outcome.

    For much of the past three years, inflation ran well above our goal, and the labor

    market was extremely tight. Appropriately, our focus was on bringing down inflation.

    By keeping monetary policy restrictive, we helped restore the balance between overall

    supply and demand in the economy. That patient approach has paid dividends: Inflation

    is now much closer to our 2 percent objective. Today, we see the risks to achieving our

    employment and inflation goals as roughly in balance.

    Our policy rate had been at a two-decade high since the July 2023 meeting. At

    the time of that meeting, core inflation was above 4 percent, well above our target, and

    unemployment was 3.5 percent, near a 50-year low. In the 14 months since, inflation has

    moved down, and unemployment has moved up, in both cases significantly. It was time

    for a recalibration of our policy stance to reflect progress toward our goals as well as the

    changed balance of risks.

    As I mentioned, our decision to reduce our policy rate by 50 basis points reflects

    our growing confidence that, with an appropriate recalibration of our policy stance,

    strength in the labor market can be maintained in a context of moderate economic growth

    and inflation moving sustainably down to 2 percent.

    Looking forward, if the economy evolves broadly as expected, policy will move

    over time toward a more neutral stance. But we are not on any preset course. The risks

    are two-sided, and we will continue to make our decisions meeting by meeting. As we

    consider additional policy adjustments, we will carefully assess incoming data, the
    -4-

    evolving outlook, and the balance of risks. Overall, the economy is in solid shape; we

    intend to use our tools to keep it there.

    We remain resolute in our commitment to our maximum-employment and price-

    stability mandates. Everything we do is in service to our public mission.

    Thank you. I look forward to our conversation.

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