Federal Reserve Chairman Jerome Powell sees the U.S. economy generating highly optimistic expectations, with the unusual combination of low unemployment and inflation fueling hopes for an extended expansion.
Powell gave a speech in Boston Tuesday, in which he cited a jobless rate running at 3.9% and inflation is around the Fed's goal of 2%. Historically, low unemployment has fueled inflation and sometimes has forced the Fed into hiking interest rates rapidly.
"While these two top-line statistics do not always present an accurate picture of overall economic conditions, a wide range of data on jobs and prices supports a positive view," Powell told economists.
He pointed out that after last week's Federal Open Market Committee meeting, a reporter asked him if the current conditions are "too good to be true," which he called "a reasonable question."
"From the standpoint of our dual mandate, this is a remarkably positive outlook," he said, referring to forecasts from Fed officials, the Survey of Professional Forecasters and the Congressional Budget Office.
Powell went on to say the Fed has sought to manage those expectations and convince the public that it will keep inflation around the Fed's 2% goal.
Besides low unemployment and inflation, Gross Domestic Product grew at a 4.2% pace in the second quarter and could top 4% again in the fourth quarter. Consumer and business surveys also are running high, and corporate profits have been growing around 25% this year.
