文字起こし MARKET PLACE Jerome Powell インタビュー

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United States Senate had a little business to do today.

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Under the previous order, the Senate will proceed to the consideration of the Powell nomination, which the clerk will report

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the Federal Reserve System Jerome H. Powell of Maryland to be Chairman of the Board of Governors,

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and the votes are in on this vote. The yeas are at the nays 19 and the nomination is confirmed. The newly confirmed Fed chair on the program today from American Public Media, this is marketplace.

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In Washington, DC today, I'm Kai Rozelle, it is Thursday, the 12th of may get as always to have your long everybody truth be told, we didn't really even know the Jay Powell is nomination for another four years chairing the Fed was gonna be on the Senate agenda for today when we nailed down the interview with him last week. But we'll take it not really that you need a news peg for a talk with the Fed chair right now, because you can make a case that Powell and the Federal Reserve and by extension, this whole economy are in about as tricky spot as there has been in a good 50 years. Sure the Fed has started tightening up raising interest rates and shrinking its balance sheet. But all of that can seem kind of distant right? When it costs 100 bucks to fill up the tank groceries are costing more than they ever have. And there is no real sign that inflation is easing off. So over to the Fed building we went today where the first question was about how Powell is trying to do what he's trying to do. Let me start with your most recent press conference. At the beginning, you went out of your way, I think it's fair to say, to speak directly to the American people you actually use those words. Do you think you're getting through to the American people?

2:25
Well, I hope we are. So you know, most of the people who listen to the press conference and follow our communications very carefully, our market participants are economists fed watchers of various kinds. And I thought it was important to try to speak directly to the public that we serve and tell them that we understand that inflation is very painful, that the Fed is accountable to get inflation down to 2%. And that we are we have the tools and we have the you know, the strong desire to get inflation under control. And we'll we'll do that.

2:55
I don't doubt that they take you at your word that that you want to get this under control. And that and that price stability and fed speak is critical to this entire economy. I wonder what you say, though, to the person who as you tighten up on interest rates, and slow the economy down, right, which is the plan? What do you say to the person who's going to lose his or her job, or maybe not see the pay wage pay raise that they ordinarily would would get?

3:23
So you can see that inflation is just way too high here in the United States. And by the way, the same all over the world, really, the global economies all around the world have been hit by a series of inflationary shocks. And pretty much I just came back from a set of meetings with central bankers from around the world. And we're all facing the same kind of issues and the public are facing the same kinds of issues. Here, though worse here to be clear, right? Some places worse, some places better, we're facing different challenges, but then again, our economy is more fully recovered. They may be just behind us in time. But well, what would I say to that person. So I would say that we fully understand and appreciate how painful inflation is, and that we have the tools and the resolve to get it down to 2%. And that we're going to do that. I will also say that the process of getting inflation down to 2% will also include some pain, but ultimately, the most painful thing would be if we were to fail to deal with it and inflation were were to get entrenched in the economy at high levels. And we know what that's like. And that's just people losing the value of their paycheck to high inflation. And ultimately, we'd have to go through a much deeper downturn. And so we really need to avoid that.

4:34
What keeps you up more at night, the prospect of inflation sticking around, or the idea that you're going to cause a recession?

4:41
Well, look, I think I think it's a very challenging environment to to make monetary policy and we certainly our goal, of course, is to get inflation back down to 2%. Without having the economy go into recession or or put it this way, with with the labor market remaining fairly strong. That's what works. trying to achieve. I think the one thing we really cannot do is to fail to restore price stability, though nothing in the economy works. The economy doesn't work for anybody without price stability, we went through periods in our history where inflation was quite high. This was back in the 70s. And I was old enough to remember, I'm old enough to remember that very well. And we really, we can't fail to restore price stability.

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How much do you think it matters? Just on that idea of the 1970s? How much do you think it matters, that there are generations of people in this economy who know nothing but 2% inflation or less for like, 50 years now? So I think and this is, that's why this is scary as hell, right?

5:38
Well, look, I would, I guess I would say it this way, you know, it's a good thing that we haven't had high inflation, really, in 40 years, it's a great thing. You know, we the 70s, in the 80s. It's very unpleasant phenomenon. And people are now for the first time many people, as you point out, are young enough that they haven't experienced that, and now they're seeing what it is. And it's unfortunate, I wish they weren't, I wish that all of this hadn't happened. And we still had 2% inflation. And we need to get back to 2%. Inflation. That's the main thing, the main lesson is we we must do, whatever, you know, what we need to do to get inflation back to 2%. And we have the tools to do that. And we will.

6:15
So you've said you're going to do whatever you need to do. At that last meeting, you specifically took a 75 basis point increase in the federal funds rate, that is to say, three quarters of a percentage point, you took it off the table. Why? Well, actually, what

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I what I said was that we were that the committee had reconsidering, right that's I said, we weren't actively considering that. But I said what we were actively considering, and this is just a factual recitation of what happened at the meeting was a 50 basis point increase, that's a half a percentage point increase the first one in more than 20 years. And that we thought that if the economy performs about as expected, that it would be appropriate for there to be additional 50 basis point increases that the next two meetings, so but I would just say, we haven't a series of expectations about the economy, if things come in better than we expect, and we're prepared to do less, if they come in worse than when we expect then we're prepared to do more,

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let me be clear, 75 basis points is prepared to do more.

7:14
You what you've seen as you've seen this committee adapt to the incoming data and the evolving outlook. And that's what we'll continue to do.

7:23
You also talked about a pathway, he said, it's gonna be challenging to get to this mythical soft landing, what does that pathway look like?

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So a soft landing is, is really just getting back to 2% inflation, while keeping the labor market strong. And it's, it's quite challenging to accomplish that right now, for a couple of reasons. One is just that that unemployment is very, very low, the labor markets extremely tight, and inflation is very high. So it will be challenging, it won't be easy. No one here thinks that it will be easy. Nonetheless, we think there are pathways as, as you mentioned, for us to get there. And really what that means is just as we raise rates, we so the problem, what causes inflation is that demand and supply are out of whack. There's too much demand, for example, in the labor market, there's more demand for workers than there are people to take the jobs right now by a substantial margin. And because of that, wages are moving up at levels that are unsustainably high and not consistent with with low inflation. And so what we need to do as we get into get demand down, give supply a chance to recover and get those two aligned. So how might we do that? Right now, in the labor market there, there are two job openings for every unemployed person that's historically high level. So in principle, and I'm not saying this, it'll be easy to do in principle, you could moderate demand reduced demand to the point where we're job openings moved down substantially. And the labor market gets much closer to being in balance. And that would affect wages would still be moving up at healthy levels that wouldn't have to go down. But ultimately, they would be at levels that would be consistent with 2% inflation.

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So here comes the poke in the eye question. Did you blow it and being late, and failing to recognize that inflation was going to stick around?

9:05
So I the way I'd put it was this, we were if you go back to the economy of February of 2020, right before the pandemic, three and a half percent unemployment, inflation right on target, a little below 2%. And the economy is growing at a couple percent. It's a really nice place since then, we've been hit with, you know, the first pandemic in 100 years global pandemic. And, and, and then a very, very strong response both from fiscal authorities and from us, followed by the outbreak of inflation followed by the war in in Ukraine, followed by now the big shutdowns all over China. So we've really been hit by a series of, of global, really inflation, inflationary shocks. And so all around the world. You're seeing economies that are struggling with high inflation, many, many countries around the world are having the highest inflation they've had in 40 years and struggling with the exact same things we are so there's a lot of commonality there are some differences. But you know, I have said, and I will say again that, you know, if you had perfect hindsight, and you'd go back, and we probably would have been better for us to have raised rates a little, a little sooner, I'm not sure how much difference it would have made. But we have to make decisions in real time, based on what we know, then. And we did the best we could. Now we are, we see the picture clearly. And we're determined to use our tools to get us back to price stability.

10:26
You've said not just in your last meeting, but many a time that, that the feds tools are blunt instruments, trying to try to finesse a really difficult problem. Which gets me to this is one of the things we talked about the last time I was here, and it was in the context of President Trump and him piling on you, actually. And you said, you know, you control the controllable, and you just you do what you can do? I wonder now if if you are left with really only being able to through your blunt monetary policy tools control the control, you can't control supply in this economy, you can't control fiscal policy. Right. I wonder how frustrated you are?

11:11
I wouldn't put it is frustrated, you know, I'm really honored to be able to play this role. And I just would, I guess I would say it this way we can, what we can control is demand, we can't really affect supply with our policies, and supply as a big part of the story here. But more than that, there are huge events, geopolitical events going on around the world that are going to play a very important role in the economy in the next year or so. So the question whether we can execute a soft landing or not, it may actually depend on factors that we don't control. But we should control the controllable and what we control is there's a job to do on demand. Demand is out of whack with supply. As I mentioned, in the labor market, there's more demand than there are people to satisfy that demand. And we can address that directly. And we will by trying to, you know, moderate demand in a way that lets the labor market get back in balance and help inflation get back to 2%.

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One of the questions on my list that I did not manage to get a J PAL is he really upset that a little air is coming out of the stock market because more did today we'll have the details when we do the numbers also below the fold a little bit more from the Fed chair. Coming up,

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Inflation affects everybody you go to the grocery store you feel you go to the gas station and you feel it.

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Wait, that's not Jay Powell. First, though, let's do the numbers. Dow Industrials down another 103 points today about three tenths percent close to 31,730 s&p 500 down five points 10% 3930. There NASDAQ actually gained six points less than 10% 11,370 retail gas prices are way up there. As you know, triple A says the national average for a gallon of regular gas almost $4.42. Today, Patrick DeHaan over Gas Buddy observed that Americans are now spending $125 million more on gas every day than they did just one short month ago. A year ago. We're paying just over three bucks on average for those four forts of federal exam to check in on some stocks in the electric vehicle industry then yeah, rivian automotive reported quarterly loss not as steep as expected. jeres added almost 18% Struggling startup Lordstown Motors announced the deal to buy in Ohio fact to sell in Ohio factory rather has closed and shares surged. 47% lucid group boosted 13%. Today Finland is moving closer to NATO membership you might have read that. So a quick look at Finland from an economic perspective relatively prosperous per capita GDP roughly in the same league as Germany and Australia. total GDP $270 billion or so exports. About a third of that bonds up yield on the 10 year T note down to 2.86% You're listening to marketplace.

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This is marketplace, I'm chi raised all a huge part of what's going on with inflation right now, even apart from the supply chain stuff, as chair Powell was saying up at the top of the program is about the labor market, and how tight it is and what that demand for workers means for the rest of the economy. So here we go with Jay Powell, part two, you said maybe a minute or two ago, and I apologize for them all running together. But I'm sure you did appreciate that. You said the labor market is tight to an unhealthy level in this economy. When you frame that, in terms of people now being able to get jobs, if they want jobs, how was that unhealthy?

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That part of it is healthy? No, certainly from the standpoint of a worker, you see people able to change jobs, the the level of people quitting to go find jobs that they prefer that pay better, maybe they're doing the same thing. But for a competitor, they'll quit levels at an all time high and wage wage increases are very high. You know, of course, all of us think that's great. When I said unhealthy, what I really meant was that there's an imbalance between demand and supply. And companies can't find workers, they just there aren't the workers, there's there's more demand than there are than there are people to supply their labor. So that's not a healthy situation for an economy because it results in high inflation. That's a significant part of the inflationary story. So what we want is wages that are consistent with 2%, inflation, you know, workers now are seeing their paycheck eaten up by inflation, particularly people at the lower end of the income spectrum. And you know, that's not a good situation, it's not a healthy situation, healthy situation is when supply and demand are, are more closely to being aligned more close to being aligned, and inflation is back down to our goal.

17:37
Almost whatever it takes.

17:41
You know, I just would say it this way, the committee and I are firmly committed to getting inflation back down to 2%. And the reason is that the economy doesn't work for anyone, unless you do that. If you think about it, high inflation is not consistent with a great labor market. It's not consistent with a sustainable level of employment. It doesn't work for anybody. So we really it's the price stability is the bedrock in some sense on which the economy has to rest. And we've had it for a long time. We suddenly are hit by all these shocks and like others around the world, we're struggling to restore it, but but restore it we will.

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You talked a little bit about Paul Volcker at the last meeting, and you've talked about him before you said you knew him a little bit. But the thing that really struck you about him was that he always did the right what he saw to be the right thing. In arguably more difficult economic times than than you have right now. My question is, How sure are you that what you are doing now is the right thing?

18:45
Yeah, so that's that's a good point. I do admire Paul Volcker. I think everyone admires Paul Volcker now. So I'm not to be singled out in any way fair and admiring and voting, you know, so he was a truly great public servant and person. And the point was that he did what he thought the right thing was and and he was prepared to be unpopular for that, because he was looking at the medium and longer term. Well, for the country. I don't have any, you know, I think that's a good thing to keep in mind as, as you as you do public service jobs is Don't Don't think about what's popular, do what you think is right. And then and let everything else take care of itself. I take it as a general principle. It doesn't, it doesn't provide any, it doesn't shed any light on on the current situation. We have to make an assessment of what the right thing to do is in the current situation. We know that what Paul Volcker did was right in his situation, and it's something like that might turn out to be right here. But I don't think we know that I think we have we have a lot to learn about what the path ahead looks like.

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Want to see a little bit more? I'm sure pal, coming up in a couple of minutes. It was a busy day here at the marketplace bureau in Washington, DC. And yes, this is gonna sound like a humble brag, but whatever on the way to the Fed duck to cheer bow. I took a quick swing by the White House for an interview with Cecilia Rouse, the chair of the White House Council of Economic Advisers talked about a lot of things. Of course, one of them also, of course, was inflation. Our whole interview coming up tomorrow here, though, is a sneak peek. Let me ask you this, when you were having these conversations about the American rescue plan, across West executive, Dr. Over there in the Oval Office, did anybody say, hey, you know what, Mr. President, we could get some inflation out of that.

20:56
We were really focused on the fact that we didn't know how long the pandemic would last, that we had had very anemic job growth. In fact, in December, we'd lost jobs. And that we needed to provide additional assistance to the American people. That's what we were very much focused on. So you chose growth, we chose growth. And we chose knowing that without those actions of the federal government, we may well have faced a double dip recession last year, unemployment would be much more elevated today. And we would have had lower growth for not just this year, but for years to come. So yes, we took the path of supporting this government as well as the our economy as a result. We know that the debt the debt was reduced by $350 billion $260 billion dollars last year, we're on track to reduce the debt by $1.5 trillion that last year because income tax revenues have come in higher than expected because of the growth because people have jobs. So it is going to take us years, we will be looking back on this period for years trying to assess what was exactly the right combination of policies. But this president was prioritizing protecting people and businesses and getting us through in the best in the best position possible.

22:18
Let me ask you about the President and the speech he gave on Tuesday about inflation and the efforts that you and his administration are making pretty clear that he's going directly to the American people, because he understands not only the political risks, but also the economic risks. To everybody out there. Do you think he's getting through? I asked, because people feel terrible about this economy. The underlying economy is good, right? Jobs are strong. There's some growth, you know, last quarter is terrible. But there's there's growth on the horizon. But people still feel lousy.

22:51
Absolutely. And the President understands that, because Inflation affects everybody, you go to the grocery store, you feel it, you go to the gas station, and you feel it. And he understands that he comes from a family where this kind of inflation would would really hurt and cause a lot of anxiety every night. So you're right. He wants to get out to the American people speak to the American people, not just from Washington, DC. He was in Illinois yesterday. He's been around the country. And you're right. He's trying to have his economic team go out and explain that he really is focused on this. This is first and foremost, the purview of the Federal Reserve. And it is a wonderful thing that at least three of the four current nominees have now been confirmed. We're looking forward to Michael Barza testimony next week, and we need him to be confirmed as well. And he respects their independence. But we're all you know, we welcome the fact that they have are now changing their policy stance towards how they're addressing the price stability mandate versus the full employment mandate,

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since you mentioned the Fed and ordinarily, I wouldn't because you this administration, that is our steadfast and not critiquing the Fed, but since you brought it up. Do you think chair Powell can thread the needle and get that soft landing?

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Look, I have. I personally have a lot of faith in chair Powell and his entire team. This is a difficult job that they have, there's no question about it. But I will say this because of the growth that we had last year. We have some resilience we have some headroom for the for the Fed to be making the dials that they need to make in terms of raising their funds rate the interest rates, dialing back their asset program, so they have some more room to maneuver in, in addressing inflation than even many of our counterparts around the world is their central banks make similar moves.

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Cecilia Rouse she runs the White House Council of Economic Advisers the rest of that interview on this program, Mark

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This final note on the way out today, if you know me, and if you know the show at all, then you know what's coming next. I need you to roll with me on this last one. We've got a little game we play on the show. It's called what is Jay Powell thinking in five words or less? And I asked our Friday afternoon panelists, when we have big monetary policy topic come up. I say, Okay, what is Jay Powell thinking in five words or less, and I would not be able to forgive myself if sitting across from Jay Powell. I don't ask Jay Powell what Jay Powell is thinking in five words or less I should tell you I did this with Obama and he blew it he went on for like a minute so no pressure

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five words or less I'm gonna go with I'm gonna go with what I really am thinking is get inflation back under control. Oh, man. Oh,

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Jay Powell. Thanks for your time. I appreciate it. Thanks, guys. Good to see you all right, we gotta go no moment of economic context today because I gotta tell you the whole show has been economic context today. Well, oh, you're one I guess I'm here boy John Buckley, Eve Epstein John Gordon Ricard died the Parker made feature and Stephanie seek are the marketplace editing staff. I'm chi result we will see you tomorrow everybody. This is APM

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