Fed's Powell says manufacturing slowdown isn't a threat to broader US economy
Consumers are driving the U.S. economy, Fed chair says.
Federal Reserve Chairman Jerome Powell does not expect sluggish U.S. factory activity — which stoked fears of an impending recession earlier this year — to spill over into the broader U.S. economy.
"That's a risk that we monitor very carefully," Powell told the Joint Economic Committee on Thursday. "We don't see that yet."
Powell told lawmakers that because consumers are powering almost three-fourths of the country's gross domestic product at the moment, a slowdown in manufacturing is unlikely to pose a significant threat to the U.S. economy.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
"That is what is driving our economy now," he said. "And it seems to be continuing to do so. But we monitor that very, very carefully."
Federal Reserve Board Chair Jerome Powell testifies on the economic outlook, on Capitol Hill in Washington, Wednesday, Nov. 13, 2019. (AP Photo/Jose Luis Magana)
In August, the U.S. manufacturing sector contracted for the first time in three years, raising concerns about the health of the economy. That grim trend continued in October, when the industry posted the biggest contraction in more than a decade. Although the metric improved slightly in October, it remains in contraction territory at 49.1.
WORLD'S WEALTHY BRACING FOR HUGE SELL-OFF IN 2020, UBS SAYS
Although manufacturing only accounts for about 11 percent of the U.S. economy, weak growth in the sector tends to precede recessions.
But Powell dismissed the possibility of a recession in the U.S., saying there's no reason the 11-year economic expansion can't continue.
"U.S. economy is the star economy these days," he said. "More than other advanced economies and [there's] no reason to think that can't continue."