The Chair Of The Federal Reserve Just Used The Term “Slowdown” To Describe What Is Happening To The U.S. Economy
The Chair Of The Federal Reserve Just Used The Term “Slowdown” To Describe What Is Happening To The U.S. Economy by Michael Snyder for The Economic Collapse Blog
Now even the Federal Reserve is publicly admitting that the U.S. economy is slowing down. And that is quite remarkable, because usually the Federal Reserve is extremely hesitant to say that an economic slowdown is taking place. As I pointed out the other day, in 2008 former Fed Chair Ben Bernanke kept insisting that a recession was not coming, but we found out later that a recession had already begun when he was making those statements. Normally the Federal Reserve tries very hard to paint a rosy picture of our economic future, and one of the big reasons for that is because they want us to believe that they are doing a good job and that they have everything under control. So it was quite stunning to hear Fed Chair Jerome Powell use the term “slowdown”to describe what is coming for the U.S. economy on Wednesday…
Citing a more modest outlook for the economy, the Federal Reserve on Wednesday held interest rates steady and signaled it did not plan to raise rates at all this year and would bump them up just once in 2020, providing a road map for a sustained period of easy-money policy.
“The U.S. economy is in a good place,” Fed Chairman Jerome Powell said at a news conference, adding policymakers foresee “a modest slowdown, with overall conditions remaining favorable. We see no need to rush to judgment (by lifting or cutting rates).”
Admittedly, he did only say that it would be a “modest slowdown”, and so to most people that won’t sound that bad.
But this is the very first time that Powell has talked like this, and the truth is that the Atlanta Fed’s GDPNow model is currently forecasting that U.S. growth in the first quarter will be less than half a percent. Fed officials are hoping that growth will be better in the second quarter, but there is also a very strong possibility that the economy will continue to decelerate.
Because the economy is entering a “slowdown”, the Federal Reserve announced on Wednesday that it does not anticipate any more interest rate hikes for the rest of the year.
Normally Wall Street would experience a huge surge of euphoria upon hearing such news, but stocks were actually down on Wednesday…
The Dow Jones Industrial Average and S&P 500 closed lower on Wednesday after the Federal Reserve’s latest monetary-policy announcement dragged Treasury yields lower, pushing bank shares down.
Goldman Sachs led the 30-stock Dow to end the day down 141.71 points at 25,745.67. The S&P 500 closed 0.3 percent lower at 2,824.23. The Nasdaq Composite eked out a gain, closing 0.1 percent higher at 7,728.97.
This certainly could not have been the reaction that the Federal Reserve was hoping for.
Could it be possible that bad news for the U.S. economy is no longer good news for Wall Street?