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tv   Federal Reserve Chair Powell Testifies Before House Budget Committee  CSPAN  November 21, 2019 4:28am-5:25am EST

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>> the hearing will come to order. thank you for coming to the committee today to testify. we know you are on a tight schedule and in order to keep you on schedule and ensure all members have an opportunity to ask questions i ask unanimous can send members will be recognized during the question and answer session for three minutes. without objections ordered in the ranking member and i will be recognized for five minutes during the question and answer sessions. without objections ordered we will both be recognized for three minutes and i they will now yield myself three-minute but once again thank you for being here it's been seven
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years since the chair of the federal reserve has appeared before this committee and we are very grateful for your being willing to do that i want to make sure that we support the independence and the repeated attacks are unacceptable and dangerous. i look forward to hearing the testimony and discussing opportunities congress and the fed have to support the workers and to foster a healthy sustainable economy that works for all americans and with that i will yield to the ranking member. >> it is an honor to have you before this committee as the chairman of the committee has said it's been many years since
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the researcher man has been here and now we are delighted to have you. i will submit my opening comment for the record so we can expedite matters and hear your opening comments and get the q-and-a. but once again, welcome. i think the ranking member and if any other members have opening statements of a mesa to those in writing for the record as well. once again, thank you for being here this morning. the committee has received your opening statement and it will be made a part of the record. you now have ten minutes to get your oral remarks and he begin when you are ready. >> thank you very much, chairman and ranking members of the committee. i appreciate the opportunity to testify before you today. let me start by saying that my colleagues and i strongly support the goal of maximum employment and price stability congress has set for the monetary policy. we are committed to providing clear explanations about the policies and actions. congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on facts and objective analysis. we appreciate that our independence brings with it an
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obligation for transparency and accountability. today i will discuss the outlook for the economy and the monetary policy. the u.s. economy is now into the 11th year of this expansion and the baseline outlook remains favorable. gross domestic product increased at an annual pace of 1.9% in the third quarter of this year after rising around 2.5% last year and in the first half of this year. the moderate third-quarter reading is partly due to the transitory effect of the uaw strike at general motors. it also reflects weakness in business investment which is being restrained by sluggish growth abroad infiltrate the and with trade development. these factors also weigh on exports and manufacturing. in contrast, household consumption has continued to rise solidly
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supported by the healthy job market, rising incomes and levels of consumer confidence. reflecting the decline in mortgage rates since late 2018, residential investment turned up in the third quarter following an extended period of weakness. the unemployment rate was 3.6% in october, near half a century low. the job gains has eased this year but remains solid. we have been expecting some slowing down after last year's strong pace. at the same time, participation in the labor force for people in their prime working years has been increasing. ample job opportunities appear to have encouraged many people to join the workforce and others to remain in it. this is a very welcomed development. the improvement in the job market in recent years has benefited a wide range of individuals of communities. in the recent wage gains have been the strongest for the lower paid workers to the people who live and work and grow in middle-income communities and many that have struggled to find work are now getting opportunities to add new and better chapters to their lives. significant
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differences however do persist across different stuff workers in different areas of the country. unemployment rates for african-americans and hispanics are still well above the rate for whites and asians into the portion of the job is over in the rural communities. inflation continues to run below to open committees to present objective. the total price index for personal consumption expenditures increased 1. 3% held by the declines in energy prices. core pce inflation which excludes energy prices and tends to be a better indicator of future inflation was 1. 7% over the same period. looking ahead, my colleagues and i see a sustained expansion of economic activity, strong labor market and inflation near or symmetric two present objective the objective is most likely. this is based on outlook partly reflecting the policy adjustments that we have made to provide support for the economy. however noteworthy
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risks to the south will remain in particular the sluggish growth abroad and trade developments have weighed on the economy and imposed on the risks. moreover, inflation pressures remain and indicators of long-term inflation expectations are at the lower end of the historical ranges. below target inflation could lead to an unwelcome downward slide in longer-term inflation expectations. we will continue to monitor these developments and assess the implications for the u.s. economic activities. we will also continue to monitor risks to the financial system. over the past year the
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overall level of the vulnerabilities facing the financial system has remained at a moderate level. overall, investor appetite for risk appears to be within a normal range although it is elevated in some aspect. it's loads of businesses are historically high, but the ratio of the household borrowing to income is low relative to its pre-crisis level and has been gradually declining in recent years. the core of the financial system appears resilient with the leverage low in funding risk limited to the levels of recent decades. at the end of this week we will be
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releasing our third semiannual financial stability report that shares our detailed assessment of the resiliency of the u.s. financial system. during the monetary policy, over the past year weakness in global growth, trade developments in the unit inflation pressures have prompted them to address to the assessmententrustthe assessment of the appropriate path of interest rates. since july, the committee has lowered the range by three quarters of a percentage point come and abuse policy adjustments but the current target range of one and a half to three quarters of a percentage. the committee took these actions to help keep the economy strong and inflation near the two present objective and to provide some insurance
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against ongoing risks. as the monetary policy operates the full effect of these adjustments are on economic growth, job market and inflation will be realized over time. we see the current stance of monetary policy as likely to remain appropriate as long as the incoming information about the economy remains broadly consistent without outlook of moderate growth, strong labor market and inflation near our symmetric to present objective. we will be monitoring the effect of the sections these actions along with other information bearing on the outlook as we assess the appropriate task of the target range for the fund rate. of course if the developments emerge, we would respond accordingly. the policy is not only present course. the fomc is committed to ensuring that the policy framework remains well positioned to meet the statutory goals. we believe
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that our existing framework has served us well nonetheless the current low interest rates involved in the environment may limit the ability of the monetary policy to receive support through the economy. we are currently conducting a public review of the monetary policy strategies, tools and communications. the first review of its kind for the fed. with the u.s. economy operating close to maximum employment and price stability, now is an especially opportune time to conduct such reviews. throughout these events in the country, we've been hearing a range of perspectives only from academic experts but also from representatives of consumer, labor, business, community and other groups. it will draw on the insights that we assess this help you achieve and maintain the maximum employment and price stability. we will continue to report on the discussions in the minutes of the meetings and share the ensured the conclusions when we finished the review likely around the middle of next year. and the downturn will also be important for the fiscal policy to score the economy. however, as noted in the ceos recent long-term budget outlook, the federal budget is not run that is on an unsustainable path with high and rising debt. over time, this outlook restrained fiscal policy makers willingness or ability to separate the economic activities in the downturn. in addition, i remain concerned
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that the high and rising federal debt can in the longer term restring private investment and thereby reduce the productivity and overall economic growth. putting the federal budget on a sustainable path would aid the long-term u.s. economy and help ensure that policymakers have the spacepolicy makers havethe space to use fiscal policy to assist and to stabilize the economy if it weakens. i will conclude with just a couple of words along the technical implementation of the monetary policy. in january, the fomc data to key decision to continue to implement monetary policy in an ample reserves regime. in such a regime we will continue to control the rates primarily by setting up our advanced rate and not through frequent interventions to actively against the supply of reserves. in the transition to the efficient and effective level of the reserves and the regime, we slowed the gradual decline in may and stopped in july and in response to the funding pressures and the markets that emerged in september, we decided to maintain the level of reserves at or above the level that prevailed in early september. to achieve the level of reserves he announced october that we would purchase treasury bills in the second quarter of next year and would continue temporary open market operations through january. these actions are purely technical measures to support the effective implementation of monetary policy as we continue to learn about the appropriate level of reserves and do not resent a change in the stance of monetary policy. thank you and i look forward to our discussions. thank you very
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much for your statement. we will now begin to question and answer session. as a reminder, members can to present questions to be answered >> later. those questions and answers will be made a part of the formal hearing record. any members that wish to set questions for the record they do so within seven days. as we normally do, the ranking member and i will defer questions until the end. i would just admonish all the members i will not be my normal self and will try to keep strictly to the time limits so we can get him out of here. he has a hard stop at noon. with that i now recognize the gentleman from massachusetts for three minutes. >> chairman powell ticket for joining us this year. we share your interest in continuing this 11 year economic
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expansion. but we also have concerns. and one of my concerns i will be the first to say we in congress have not been good partners and doing our part. you just mentioned that you are concerned about the high and rising federal debt, and the fact that in the long-term it can restring private investment and thereby reduce productivity and overall economic growth. it is a typical to increase deficits as we are now during the prolonged economic expansion. however according to the cbo as it is discussed in the jobs act which couldwhich can really benefited wealthier corporate american corporations at one point find truly in dollars deficit over ten years. now of course republicans claimed this would lead to increases if you testify moderate third-quarter gdp growth has a weakness in business investment which is impacted by sluggish growth abroad and trade development. i'm hoping you can elaborate on
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what you mean by trade development. >> first of all, let me say we have no responsibility for trade policy and not giving anyone advice on the trade policy is not our role. we have a narrow role we try to do that in the u.s. economy and supporting maximum employment stable prices and to do that, anything that could affect our achievement of those goals is in principle relevant for the monetary policy so we have been hearing for the last year and a half from businesses that uncertainty around the trade policy had some extent the tariffs have been weighing on
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thewaiting on adifferent sentiment so evaluate or what's up with this particular policies. remember we are not elected by anyone. we've been given a specific mandate, and i think it is really up to that is the question is would it help increase workforce participation? >> there is research that shows those kind of policies that support childcare and family leave and other countries have supported the higher participation among women in the workforce. hispanic the gentleman's time has expired and recognized gentleman from ohio for three minutes. minutes. >> thank you, mr. chairman, and ranking member for holding this important hearing and chairman powell, thank you for being here today. as the representative for eastern and southeastern ohio, and very concerned about the
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consequences of our growing national debt and the effect that will have on the national security and quality of life for our children and grandchildren. the publicly held debt has averaged 42% of gross domestic product over the last 50 years. it is now at 79% of gdp. within three decades the congressional budget office projects that it will reach 144% of gdp. which would be a god by far the highest level in american history. so, chairman powell, in your view, is the federal budget outlook sustainable? >> i think i would define sustainable as the debt is not growing faster than the economy. our debt is growing faster than our economy by a margin, and so i think by definition that makes it unsustainable. >> >> can do that to continue to indefinitely grow as a percentage of gdp, and at what point do we reach the tipping point where we, >> are unrecoverable? >> that isn't a question to which there really is an answer to the specific tipping point. there are examples of countries that have much higher levels. what you do know is that over time as the debt builds up, you will be spending more and more. more accurately our children will be spending more and more of their tax dollars to pay for interest
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on the borrowing that we have done for the things they need come education, healthcare, >> security. >> you answeredsecurity. >> you answered my next question in the first response. what is the appropriate way to measure and that is when the economy is growing faster than the debt and not the other way around so i will skip that question. if the federal budget outlook is unsustainable, and i think
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we've established that it is, what a challenge >> does this pose for the u.s. economy? >> i would stress these are longer-term challenges, and i think ultimately we would have no choice but to get on a sustainable path. you don't have to pay down the debt or balance the budget. you have to have an economy that is growing faster than the best and you have to do that for ten or 20 years. that is how we have successfully handled this and others in the past. so, if you don't do it, you then will over time, not this year or next year but over time you will be cropping up a private investment and things like that. >> i will yield back my whole 18 seconds. >> i >> will now recognize the gentleman from new york for three minutes. >> thank you mr. chairman for your presence and your leadership as it relates to the monetary aspects of the u.s. economy. i would first say the manufacturing economy fell into a recession in the first half of this year. >> yes. well, in the sense that manufacturing output has declined in the course of this year. >> and in connection with that manufacturing recession that we are currently in based on technical terms, as the trade
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development here in the united states that you made reference to in the opening segment contributed to that session? >> i think we would assess that a number of factors contributing, trade is one of them but it's certainly not the whole story. others would include a growth around the world that includes a number of factors. >> and as it relates to the trade, those developments particularly included the ongoing conflict and regulatory tariffs being imposed by the united states, china, on each other. >> that is our assessment and that of many other analysts on the manufacturing activity. >> is it reason to believe that manufacturing recession that we are currently in actually present a risk of spilling over into the entire team? >> that is a risk we monitored very carefully. >> we don't see that yet. but the 70% of the economy that is the consumers is filled with high confidence, low unemployment, wage is moving up, very low unemployment, labor force participation. that is where it is driving our economy now, and it seems to be continuing to do so, but we
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monitored very carefully. >> as it relates to the potential adverse impact on the consumer, to the extent that the consumer goods have increased and i believe some evaluations of that >> have suggested the average american family is now paying at least a thousand dollars more than they had prior to this retaliatory tariffs proposed. it's a policy that if the trend were to continue, there is a risk that the increased costs to consumers into paying for goods could adversely >> impact confidence which then could actually hurt the economy. >> it's certainly possible. the amounts that have been put on our economy and that are now growing through are not that large in relation to the overall economy. the ones that are proposed get larger and larger than that if you put them all into effect could have a bigger effect on the overall economy. the number three policy uncertainty itself is a >> separate channel through which trade doesn't affect the
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economy. >> thank you. i will, >> yield back 11 seconds. >> i will yield back three minutes to the gentleman from missouri. mr. smith. >> thank you mr. chairman. our country is in the period of economica period ofeconomic growth and the policies president trumpeted the previously public and led congress made a bet on the american workers to make up the strongest and hardest working workhorse in the world. but it concerns me when we see other countries our competitors continue to attract investment as lower or 0% rates. we need to ensure the monetary policy is best on the workers as well. since president trump's selection, the united states has made waves. the lowest unemployment in 50 years with black and hispanic unemployment at record lows, 6.4 million new jobs have been created. wages are growing and president trump's deregulation efforts have saved the average american family $3,100 in household
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income. we must promise to continue enacting both fiscal and monetary policy that works for folks back home. would you agree during the last three years of the country we've seen economic >> advances that help low income americans? >> yes, i do think that as this expansion has continued we have started to see people at the wilbur and get the bulk of the benefits and that is a great thing to see. >> i think the testimony you made the comment about low
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and middle income, >> wage growth was pretty significant in our economy over the last couple of years is that correct? >> we are in our 11th year of this now so in mouse in the ninth and tenth and 11th >> year we are seeing that coming and it's a very positive thing to see. so, you have had 11 years. the ninth, tenth and 11th, are those the, >> most significant increases in the ninth, tenth and 11th? >> yes. in fact, what has happened is as the labor market has tightened, you are seeing more job openings. historically tight labor markets now, and one of the effects that can be seen in that situation is that companies start to raise the wage is not just of those at the top, but all the >> way through the income spectrum again. .. so far no changes and then propose. can you provide a status on the capitol proposal weather now to be ready for the 2020 act? >> we are working on it and that is still our intention. samantha jones timed has expired. >> >> the past three years and the national debt increased from $19 trillion to $22 trillion. that means $3 trillion is the international debt since mr. trump's been president. mr. chairman white house counsel advisory put out a report upon passage of the 2017 corporate tax cut saying that every american family would receive an increase in household income recurring increase in household
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income between four and $9000 but is there any >> evidence that is actually occurred? >> i haven't looked at, >> that precise question. that's something cbo would be well-equipped to do. >> the economic advisers puts out a report like that i would think you would want to monitor the promises made there. the economy, is a >> currently growing at a rate that's higher than interest rates?
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>> higher than interest rates? well long-term is about the same if you think about the long-term sovereign rate of united states. it's >> roughly
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equivalent right now. >> what investment, conservative economists mark vandy from moody analytics indicates that for every dollar that the federal government gave away in corporate tax cuts if we gained 32 cents. that's a loss of investment of 68% whereas if you invested back in infrastructure every dollar that you invest in infrastructure you would get back and economic growth of $1.60 which would give you a return on investment of 60%. given the fact that interest rates are low economic growth is lower than we had hoped for. would it not would now be the time to make a major investment in transportation infrastructure? >> i would say infrastructure will thought
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their infrastructure can contribute over long periods of time to productivity and can be a great thing for countries to do. >> with low interest rates can it wipe out what you borrow to produce a growth? >> those of the questions that are your job and not ours. i wouldn't want to cover how you finance it but infrastructure spending in general something that can contribute to the economy and something that would be healthy for our economy. >> i yield back. >> i thank the gentleman and i now recognize >> the gentleman from texas mr. flores. >> chairman powell thank you for joining us today to talk about the importance of fiscal responsibility. over the past several years as you've talked about your responsibility spending increases by the federal government have increased substantially. the same time our growth and there'll revenue is lower. that said we have had growth in federal revenue. 19 was higher than 18 and 19 is higher than fiscal 17. the debt
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loan is on pace to exceed $800 billion by 2029 and that's what we spend on defense discretionary or non-defense discretionary in the face of a downturn. we have tools when we get into a fiscal downturn. you have tools that you can use in the case of an economic downturn that to the extent the deficit keeps growing in congress keeps failing to act on those quizzes that >> you to the tools the federal reserve has to deal with economic downturns? >> the issue we face is its less room to cut. we use tools other lowering interest rates for some of those tools would think would work in future situations but fiscal policy has eyes played a very
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important role in significant downturns the automatic stabilizers and sometimes the discretionary policy and i pointed out in my remarks over time not for the near term but over time less fiscal policy space is going to make it harder for congress and make congress less willing to take steps to support the economy. >> i'm going to submit a question for the record to ask you what are the factors that could surprise us and adversely affect the economy. we'll do that for the record that the federal reserve has engaged substantial rate purchase market activities beginning in mid-september and the fed was actively involved earlier this week. can you tell us what's causing the liquidity issues that are causing the fed to intervene? you said they were technical and i'm not disputing
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that i'm wondering can you tell us what is causing that activity? >> i want to stress that these are not effecting economic outcomes. i think you are trying to do the right thing. i just need to know what's causing it. >> one big thing is we have been allowing the balance sheet to climb incisively stop that back in july. it really comes down to the supply of reserves which is something we created. we surveyed the banks and said what's your lowest level of reserves. we felt we were well above the level of scarcity and then in early september. the situation where the liquidity, or banks had much more liquidity than they said they needed and yet it didn't flow in and to the repo market where rates and, gone up quite a bit. they didn't do that so we are doing a lot of frantic work to understand why. some of that may be reserved just the level of reserves needs to be higher than we thought which means our balance sheet is bigger. there may be aspects of our
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supervisory and regulatory practice that we can look at that would allow the liquidity that we have which we think is the appropriate level 2 flow more freely in the system without undermining safety and soundness. >> i will follow up on that as you finish your studies. i yield back the gentleman's time has expired and i recognize mr. boil for three minutes. >> thank you. chairman powell thank you as well reduce that history doesn't repeat itself but it does rhyme and i'm increasingly reminded by something your predecessor i think three predecessors ago said in a late 1990s coining the phrase irrational exuberance and the reason i'm increasingly
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thinking about that is because chairman greenspan used that phrase to describe what was going on in the late 90s in terms of the view of markets constantly going up and the business cycle perhaps finally being solved. i'm increasingly hearing that now 20 years later that we are 10 years into this economic expansion and perhaps the normal business cycle expansion and recession would not follow three three follow through. i have the same skeptical of that view so i'm curious what your thoughts are in specifically what your outlook is over the next 24 months whether or not this record long expansion is likely to continue. these long expansions are characteristic of the last 30 or 40 years and we think that is because we are
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no longer facing high and volatile inflation. business cycles used and when inflation would get out of control >> and it would raise rates and you'd have a business cycle. that has not been happening for more than a quarter a century. we have seen three of the four longest business cycles and u.s. recorded history. we are seeing that and if you look at today's economy there is nothing that's really booming. it's a pretty sustainable picture. i pointed out the risks are manufacturing. manufacturing is declining but not sharply. >> this is perhaps a good segue to the report that the philadelphia federal >> reserve which i'm proud to represent played such an important role in the overall federal reserve system. the report they released a week or two ago citing declines in job numbers and a number of states including my own pennsylvania. obviously that report is quite concerning. could you speak to that as well and what it possibly presents for 2020 and
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beyond? >> i don't know what you are referring to as far as declines in jobs. say the federal reserve released a report. the report that they really showing a decline in jobs pennsylvania michigan west virginia as well as four other states. >> the national level the employment report for october was very solid nationally. that will vary state to state, i did see that trades in the time has expired and i now recognize that tillman from north teleworked north carolina tornea for five minutes. >> according to the national trade and commission
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would create more than 170,000 new jobs and increase by 70 billion. we all know that free trade has radically changed all over the world and the world's financial markets have become more intertwined and integrated. it's my belief that the united kingdom exits the european union we will have the unique opportunity for a trade agreement with united kingdom. we wouldn't be burdened with some of the issues that are holding up the u.s. eia and it would an opportune time to integrate our financial markets for the most important capital markets in the world. i believe the trade between our financial markets would incentivize billions for cross-border investment which would significantly benefit the u.s. economy. i'd be curious to get
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your thoughts on the trade agreement with the capitol markets and the financial sector and the possible growth to our economy. >> i generally share your perspective that they can be beneficial to all countries. can drive productivity and prosperity so generally they are trade is a good thing. i don't have that view for you on the uk trade. i think our capital markets are pretty integrated with the uk already but between the two of us we really have a good share of the global financial markets it's important at that continue. >> one of the reasons we have a large capital markets the united states and the united kingdom for the last remaining entrepreneurial countries. i firmly believe that the financial services have more opportunity but thank you for your thoughts. i yield back. >> the gentleman yields
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back and i now recognize the gentlewoman from connecticut miss delauro for three minutes. thank you mr. chairman and welcome chairman powell. tax policy was one of the most important tools we have addressed economic inequality and promote gender and equity for tax cuts for the wealthy and corporations have played a role in enabling and in some instances encouraging those with the highest income in the most capitol to accumulate outside power and wealth. some women and particular woman of color are less likely to have wealth for a range of compounding recent in the tax code gives preference and exacerbates rather than rectifies. low effective tax rates on the highest income earners and power disparities between executives and poorly paid workers. by referencing income from wealth over and come including through our lower capitol gains tax rate the tax code amplifies rather than wreck device the inequalities. should we think about restructuring the tax of specifically treating capitol
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gains as wages to close income inequality? >> i would say that's a question that is really not one for us i'm sorry to say. we don't support or oppose particular fiscal policies. those are for elected representatives. >> i might also add there other instances with regard to the tax code and i would put them on the record. that really encourages the predatory financial practices. private equity's role in private bankruptcies including retail chains like toys "r" us the tax code shapes how the companies structure their employment. in a recent tc ja a 20% reduction
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in certain path for income and acted in that bill changes the employee employer relationship and incentivizes employers to shift workers to independent contractors. the tax code in fact has a very large impact on income inequality. let me just ask you is there an economic case for reducing high levels of inequality in your view? >> i would point to a couple of factors that i think should he have broad concern. one is the relative stagnation for medium median incomes. we want prosperity to be broadly shared in the other aspect is low mobility did we think of ourselves and probably so as a country where anybody can make it to the top but statistics show that people who are born in the bottled quintile of wealth in nine states have less of a chance to make it to third
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for the top quintile. these are not issues that the fed can work on but those are important goals that would be widely shared. >> i would think their tax-cut exacerbates the point you made. thank you very much mr. chairman. >> they'll bet rates them at the gentleman time has expired and i now recognize the gentleman from you top for five minutes. >> chairman powell thank you for coming. two hours isn't enough. i wish i had two hours with each as myself are there so many things that like to discuss prevent a degree in economics and i don't consider myself an economist but if there's anything i'd like to understand the i know you can teach me. i'm going to come to two questions if i could and if you don't have time to answer them we please provide a response because they are things i do want to understand. just in general i want to quote a few sentences from reopening statement. the baseline outlook
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remains hopeful. economic growth last year 1.9% this year again household consumption continues to rise solidly supported by healthy job market favorable levels of consumer confidence unemployment rate 3.6% and i could keep going. the reason i do is for the american people i wish they would take your opening statement and read it because there's so much encouraging news there. for anyone to paint a picture other than this is a very positive economy is just nonsense. we appreciate your contribution to that. now to my two questions and it's not necessarily policy related but in your opening statement talked about inflation to present objective and i wish you would explain to us why is it desirable and why is it
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desireable the goal of policy to have a 2% inflation rate? why not 1% or no inflation and? why is that a good thing for our economy and the second question is i understand your mandate is maximized employment and price stability and i think that's true in terms of inception but other goals of crafted from time to time whether economic pressure for example economic expansion. could you address the conflict as to whether you think that's a good thing or a bad thing and you may be conflicted as to what the fed's policies and objectives are. say >> 2% inflation target has become the norm for central banks around the world. it's a stable equilibrium if you will the reason is that if inflation is 2% there's a real return and that means a nominal interest ground for four percent and that means we have significant amount to cut in a downturn. if you were, if you had zero
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target for example for inflation that would mean you'd get the zero interest rate and what we found is when interest rates get low it can be quite difficult for economies to escape that. that's why we say to present a nonzero. >> it to understand to provide that tougher for inflation? he make if you look at the evidence over the last post-crisis we are the only major economy that has meaningfully escaped zero. some of my second question if you elaborate in writing i would appreciate it. mr. chairman i yield back. >> we are very committed to our goals are statutory goals of
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maximum employment and price stability. they work well to serve the american people and we don't want to change her shrink them. >> i now recognize the gentleman from michigan mr. kildee for three minutes. set thank you mr. chairman and thank you chair powell. two pointed like you to comment on. we may not agree on everything but i strongly disagree with the president of the united states who has at times that you are naive. i don't believe you are in naive and he is said you don't have a clue. you obviously do. he has also said he doesn't know who is or if your enemy jay powell or chairman xi. i do and i suspect most of the people in this room do. we separate ourselves from the presidents obviously view. i would like you to offer an opinion if you'd like on how helpful it is for the president of united states to on vacation attack the integrity of the fed. my second follows on some of the questions that have been asked but has to do with the disparity. even if white knowledge obviously we have been through period of sustained economic growth. we have not seen that growth experienced uniformly across the economic spectrum itself. most of the benefit has gone to
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the top of the economic ladder. in some places unfortunately we are at the bottom of both of those scales. i happened to represent cities like plants inside amount and other cities that have been geographically disadvantaged during this period of economic growth. i'm curious whether or not fed policy can in any way address the regional and economic disparity for somehow providing support for policies their information at the fed can provide to policymakers. i know the regional banks boston cleveland and chicago banks have all spent a good deal of time looking at these questions but i'm curious about whether the fed would be able to take a look at this question and address disparity regionally and across the economic spectrum. thank you. >> on your first policy of not commenting it's very important
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the public understands we do our work on a nonpartisan nonpolitical basis based on making the best analysis. they we try to be transparent and explain ourselves. we serve all americans in a nonpolitical way. in terms of disparities monetary policy is famously blunt instrument that operates at the national and international level. we don't have different policies for different reasons but as i'm sure you are aware based on your comments the 12 reserved tanks are deeply-rooted in our communities and they performed the research rule and the convening role. we don't spend taxpayer dollars or give it away but we'll pull together interested groups around issues, regional poverty issues and
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things like that and try to be a constructive force for that. i think it's worth a lot. think of the living cities project in the northeast where we are not spending taxpayer dollars but we are pulling together people with private dollars around regions and problems that are important in that region. we try to reconstruct that roll in i'm proud of that role. >> the gentleman's time has expired and i now recognize the gentleman from pennsylvania for three minutes. then i chairman powell the u.s. economy is growing at two times the rate of the eurozone three times that of japan. wages are up and we have record low unemployment as you described. the fed lowered rates from 2.25 to 1. 75 with a strong u.s. economy of inflation remaining below 2%. in your view the lowering of the fed rate would avoid
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future recession? >> i will say the u.s. economy is the star economy these days. we are growing 2% in that range. our economies are growing and there's no reason to think that can't continue. there's no reason to think that i concede that the probability of recession is elevated at this time. our forecast and expectation is one of continued moderate growth strong market inflation close to our 2% objective >> elastics benches were fueled by rapid growth in key sectors, tech and real stay primarily to retrospect this proves to be setting the stage for reversal in a recession. i don't see any such excesses in this expansion, do you?
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>> i think that's very well said this expansion is notable for the absence of part two the economy that are really hot, for example hot housing market where prices are moving up and there will eventually be a slowdown. in a case of the last economic downturn as a bubble. we don't see that in the real economy. we see a consumer sector that's very strong and we talked about manufacturing and export. sweet but it's not sharply turning down but if you look in the financial markets as they might be don't have this notable buildup of leverage broadly across economy which is troubling from a financial standpoint i would say this expansion is on the sustainable footing and we don't see warning signs that would appear in other cycles yet. >> it seems unique well balance and could continue for while.
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>> in principle there's no reason why it can't last. i would say in principle there's no reason to think that i can see the probability of a downturn is a liability. >> would competitive interest rates prove trade agreements passing the usmca come the new china agreement improve? where you see the, >> gdp going and being sustained? >> as i mentioned their outlook is for continued moderate growth and i think when you think of growth you think of two things in the long run and that's labor force and productivity producing productivity pickup in labor force growth has slowed down quite a bit as our population is grown older. you have those two up and you get to number around 2% at a sustainable rate. as a country we can raise a though we need policies to do that. if we see growth in that range that is robbing my expectation.
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>> thank you chairman powell. >> i think you are time has expired. i'm not sure but anyway thank you very much. three minutes to the chairman from new york.
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