Powell Asked For His ‘Message To Consumers…Who Don’t Feel’ The Strength Of The Economy

20 hours ago

During Wednesday's press conference, Fed Chair Jerome Powell answered questions about consumer confidence in the economy.

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Transcript

00:00Thanks for taking our questions, Chair Powell.

00:02Kelly O'Grady, CBS News.

00:04So consumer sentiment has dipped dramatically, but you say the economy and the hard data

00:10is still solid.

00:12What is your message to consumers that clearly disagree and don't feel that strength?

00:17Because the hard data they're looking at is their grocery bill.

00:20Okay.

00:21So, a couple things.

00:22The grocery bill is about past inflation, really.

00:26There was inflation in 21, 2, and 3, and prices went up.

00:29The current level-it's not the change in prices, it's they're unhappy and they're not wrong

00:35to be unhappy that prices went up quite a bit, and they're paying a lot for those things.

00:39So that's-I think that is the fundamental fact and has been for a long time, a couple

00:43years, why people are unhappy with the economy.

00:47It's not that the economy's not growing.

00:49It's not that inflation is really high.

00:50It's not that unemployment is high.

00:52It's none of those things.

00:53We have, you know, 4.1 percent unemployment.

00:56We've got 2 percent growth.

00:58And, you know, it's a pretty good economy.

01:00But people are unhappy because of the price level, and I do-we completely understand and

01:05accept that.

01:06And just to follow up, why are you still projecting two rate cuts this year if your own projections

01:12show inflation higher for longer?

01:15Does that mean you see a slowdown in economic growth as a real threat?

01:19So I think if you-yeah, I mean, remember we came into this with-at the December meeting,

01:26the median was two cuts.

01:28The median was.

01:29And so you come in and you see, broadly speaking, weaker growth but higher inflation.

01:35And they kind of balance each other out.

01:37So you think-and unemployment is really-there's really only a one-tenth change.

01:42So it's-there's just not a big change in the forecast.

01:44There really isn't modest, you know, meaningfully higher-sorry, growth and meaningfully higher

01:50inflation, which call for different responses, right?

01:53So they cancel each other out, and people just said, okay, I'm going to stay here.

01:57But the second factor is, it's so highly uncertain, is just, you know, we're sitting here thinking-and

02:03we obviously are in touch with businesses and households all over the country.

02:08We have an extraordinary network of contacts that come in through the reserve banks and

02:13put in the Beige Book and also through contacts at the board.

02:17And we get all that.

02:18And we do understand that sentiment has fallen off pretty sharply.

02:22But economic activity has not yet.

02:24And so we're watching carefully.

02:26So I would tell people that the economy seems to be-seems to be healthy.

02:31We understand that sentiment is quite negative at this time.

02:36And that probably has to do with, you know, turmoil at the beginning of an administration

02:40that's making, you know, big changes in areas of policy.

02:46And that's probably part of it.

02:48I do think the underlying unhappiness people have about the economy, though, is more-is

02:52more at the price level.

Powell Asked For His ‘Message To Consumers…Who Don’t Feel’ The Strength Of The Economy

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