PROVIDENCE – Federal Reserve Chairman Jerome Powell warned Monday that trade-related uncertainties throughout the world “have been holding back overall economic growth,” in the United States, but he said he remains optimistic about the outlook for the country.
Speaking at the Greater Providence Chamber of Commerce’s annual dinner, Powell said that manufacturing output has again fallen below its pre-recession peak and business investment has weakened as “global growth and trade have presented ongoing risks and uncertainties.”
Although he did not mention the Trump administration’s tariffs or the ongoing trade war with China in his speech, Powell said weak foreign growth “does hurt our exporters and presents a risk that the weakness may spread more broadly.”
“As the year began, growth appeared robust, but the economy faced some risks flowing mainly from weakening global economic growth and trade developments,” Powell told a crowd of more than 700 government officials and business leaders gather at the Rhode Island Convention Center. “Foreign growth, which slipped in the second half of last year, slid further as 2019 progressed.”
Powell’s comments came a month after the Fed cut short-term interest rates to a range of 1.5 percent to 1.75 percent, the third such reduction this year. He said the Fed is “strongly committed to symmetrically and sustainably achieving our two percent inflation objective so that in making long-term plans, households and businesses can reasonably expect two percent inflation over time.”
“The full effects of these monetary policy actions will be felt over time, but we believe they are already helping to support consumer and business sentiment and boosting spending in interest-sensitive sectors, such as housing and consumer durable goods,” Powell said.
Powell’s prepared remarks included no direct references to Rhode Island, whose unemployment rate was 3.6 percent in September. Earlier in the day, Powell toured an East Hartford neighborhood.
In remarks before Powell’s speech, Alden Anderson, who chairs the board of directors for the chamber, offered praise for Governor Gina Raimondo, a Democrat who is largely credited with spurring economic development in Providence during her tenure.
Raimondo said Powell has done an “extraordinary job under very difficult circumstances,” joking that the two both know what it’s like for everyone to have an opinion on what they should be doing.
Powell has had a topsy-turvy relationship with President Trump since becoming the chairman of the Federal Reserve in 2017. When Trump nominated him to the post, he praised Powell as a leader of “integrity and good judgment.” But Powell has felt the president’s wrath on social media, including a July tweet where Trump informed his 67 million followers that Powell “let us down” by not signaling more rate cuts. In August, he tweeted that Powell was “clueless.”
“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump wrote in another tweet on Aug. 23.
Last week, Trump tweeted that he had just finished “a very good & cordial meeting” with Powell, but still warned that interests are still too high compared to foreign competitors.
“In fact, our rates should be lower than all others (we are the U.S.),” Trump wrote. “Too strong a Dollar hurting manufacturers & growth!”
For his part, Powell remained upbeat in his view on the economy.
“At this point in the long expansion, I see the glass as much more than half full. With the right policies, we can fill it further, building on the gains so far and spreading the benefits more broadly to all Americans,” he said.