{"id":337209,"date":"2026-03-19T09:54:12","date_gmt":"2026-03-19T09:54:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/337209\/"},"modified":"2026-03-19T09:54:12","modified_gmt":"2026-03-19T09:54:12","slug":"even-jerome-powell-doesnt-know-whats-going-on-with-the-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/337209\/","title":{"rendered":"Even Jerome Powell doesn\u2019t know what\u2019s going on with the economy"},"content":{"rendered":"

\n In normal times, the Federal Reserve would more or less ignore an oil price shock<\/a> like the one we\u2019re in now.\n <\/p>\n

\n Oil is notoriously volatile, and high prices inevitably come down to earth after too long, making any Fed policy action on energy prices more or less moot.\n <\/p>\n

\n But these aren\u2019t normal times.\n <\/p>\n

\n Fed Chair Jerome Powell on Wednesday<\/a> noted that tariffs \u2013 another economic annoyance the Fed typically \u201clooks through,\u201d to use the fedspeak term \u2013 had already clouded the central bank\u2019s ability to see what\u2019s going on.\n <\/p>\n

\n If you think of tariffs as a translucent sheet of glass and you add oil\u2019s translucent glass behind it, you basically have an opaque economy that the Fed can no longer \u201clook through.\u201d\n <\/p>\n

\n That\u2019s why Powell used the word \u201cuncertain\u201d seven times during his press briefing and twice in the Fed\u2019s policy statement Wednesday. He just doesn\u2019t know what\u2019s happening with the economy.\n <\/p>\n

\n And if Powell, America\u2019s top economic policymaker, doesn\u2019t know, God help business leaders and consumers trying to make it through this environment. That uncertainty is why economists are increasingly worried that companies may pause their hiring plans and consumers may rein in spending. It\u2019s not exactly a great time to spend money, especially if you don\u2019t know if the price surge is a blip or long-lasting.\n <\/p>\n

\n Powell was uncertain about a lot of things this week: inflation, the job market, the path of interest rates, AI, tariffs, the housing market and now the Iran war.\n <\/p>\n

\n He even said he was uncertain about how long he\u2019d stick around in his job.\n <\/p>\n

\n The central bank chief lamented that it seems to have been one thing after another with this economy.\n <\/p>\n

\n \u201cIt has been five years, and we had the tariff shock, the pandemic, and now we have an energy shock of some size and duration. We don\u2019t know what that will be, actually,\u201d Powell said.\n <\/p>\n

\n Economic projections this week from Powell and the other members of the Fed\u2019s Open Market Committee looked a lot like their last projections in December. Inflation was very slightly higher this time around. So was economic growth. Unemployment and interest rates were exactly the same.\n <\/p>\n

\n The lack of change is because of a lack of clarity, Powell admitted.\n <\/p>\n

\n \u201cI wouldn\u2019t say there is a conviction that this is going through quickly or not quickly,\u201d Powell said about the oil price spike. \u201cYou have to write something down (for quarterly projections). And this is something that people wrote down.\u201d\n <\/p>\n

\n The haziness is showing up in every aspect of the economy.\n <\/p>\n

\"US<\/p>\n

\n Jobs: Powell noted that a massive nurses strike probably messed with last month\u2019s data \u2013 but so did the lack of immigration.\n <\/p>\n

\n Taken together, Powell said the seemingly weak labor market has the \u201cfeel of downside risk\u201d to the economy, but he acknowledged uncertainty about the job market\u2019s breakeven point \u2013 the number of jobs it needs to add to keep up with population.\n <\/p>\n

\n Inflation: The Fed has so much uncertainty about inflation that the possibility that the central bank may need to raise rates at its next meeting came up during the committee\u2019s discussions.\n <\/p>\n

\n Tariffs: Powell has said for the better part of a year that tariffs probably wouldn\u2019t cause inflation. That\u2019s because they set a new, higher price, and that\u2019s it. The prices don\u2019t keep rising. But Powell noted Wednesday that the Fed had expected tariffs to work their way through the economy by now, and they still haven\u2019t, which is something of a mystery to policymakers.
Now, Powell said, he\u2019s not sure he was right about that one-time thing.\n <\/p>\n

\n \u201cI would not use the word certain about my views on that,\u201d he said. \u201cI\u2019m not certain. I\u2019m uncertain.\u201d\n <\/p>\n

\n AI: Productivity is increasing in the economy, but it\u2019s way too early to tell whether that\u2019s because of AI or something else, Powell said.\n <\/p>\n

\n \u201cWe won\u2019t know for years what it is due to,\u201d Powell said.\n <\/p>\n

\n Actually, it\u2019s too early to see any effects of AI in the economy so far, he acknowledged. AI-related productivity gains could let the Fed cut rates in the future, but that\u2019s a tough call until the Fed has clarity on what\u2019s causing it.\n <\/p>\n

\n Housing: Powell acknowledged he was befuddled by persistent gains in housing prices, considering the job market was weakening.\n <\/p>\n

\n \u201cIt is frustrating,\u201d Powell said. \u201cIt is a good question about why we didn\u2019t see much of that last year.\u201d\n <\/p>\n

\n Oil: \u201cTraditionally, prices go up and back down,\u201d Powell said. \u201cI don\u2019t have tons of confidence on that. I think the theory is right.\u201d\n <\/p>\n

\n \u201cThe time it takes to get all the way through the economy is very uncertain,\u201d Powell added.\n <\/p>\n

\n His term of service: Powell also said he wasn\u2019t sure how long he\u2019d stay in the job. The Trump administration is criminally investigating him and the Federal Reserve in an extraordinary probe related to the Fed\u2019s expensive renovation. He said he\u2019d stick around until the probe was \u201cwell and truly over.\u201d He also said he\u2019s remain as Fed chair until a new one was confirmed \u2013 a process that could be held up by the investigation.\n <\/p>\n

\n Whether he\u2019d serve out the rest of his term as a Fed governor, which expires in 2028, after the investigation is completed and a new Fed chair is in place \u2026 Powell said he hadn\u2019t decided.\n <\/p>\n

\n Just like practically everything else about this economy.\n <\/p>\n","protected":false},"excerpt":{"rendered":"In normal times, the Federal Reserve would more or less ignore an oil price shock like the one…\n","protected":false},"author":2,"featured_media":337210,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-337209","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/337209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=337209"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/337209\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/337210"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=337209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=337209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=337209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}