Fed Raises Interest Rates and Signals 2 More Increases Are Coming

Jerome H. Powell, the Federal Reserve chairman, said the economy had strengthened significantly since the 2008 financial crisis and was approaching a “normal” level.


Comments: 198

  1. Will the POTUS express an opinion about this or will he be smart enough to keep quiet?

  2. He will comment. He will gloat and bloviate, too.

  3. I am saving my cash. The next housing crash comes when an entire generation of people who were told to get a college degree, often at massive costs, stop buying houses. I am a well established veteran, and yet, the housing market and now rising interest rates are pricing me out of SMALL towns. Cheney, WA has seen housing prices rise drastically in the last year. Same as Tucson AZ, a historically cheapish place to live. The economy may be "humming" but when the correction inevitably happens and it hits the housing market, billions in equity will be lost, and a large share of the blame for the degrading market will be foisted on to millenials.

  4. Mason, no the blame will be on Trump because of ill advised tax cuts, isolating our allies, imposing tariffs, employers not giving raises (from the supposed tax cuts), and weakening of Doof-Frank which will allow banks do what they did to crash the housing market 10 years ago.

    This is not on millennials, this is on Trump, the GOP and people who put this people in power.

  5. Why would Millennials be to blame? They can't even afford to do anything. I am Gen X but also have never owned anything in my life. When the Fed and others talk about jobs, they really should explain what types of jobs. It's not a triumph for a person in America to have to work three jobs to support themselves or their family. It's not a triumph that people go bankrupt everyday because we have to pay for health care. Literally, what does America offer its citizens anymore, other than lip service about "freedom"? Most aren't free to do much more than struggle.

  6. Wages aren't going up because employers can smell the desperation of their workers. We have been indoctrinated since the Great Recession that we should be glad just to have a job. Even if your salary does not cover the cost of living, and you are doing the job of 3 ppl because your department has been downsized, the message is clear: don't dare ask for a raise for fear you may get the next pink slip. Tesla just laid off how many salaried (aka tax paying) employees in the quest for "profitability"? How many people are going to lose their jobs in the ATT/Time Warner merger?

    My small business is being hit with taxes and fees at every turn, but Bezos is able to force the city of Seattle to abandon a tax levied on businesses making S20 mill+ in revenue per year. Well my two person team would pay $275 per person to help deal with the homeless crisis. But the richest man in the world can't cough up a paltry $12 million per year when Amazon's stock price is over $1700 a pop. Give me a break.

    The economy is not "hot" for most of us. Every increase by the Fed translates into significantly higher interests rates for individuals and small businesses for credit and loans for homes, cars, and education. That's apparently how most of the money is made in this country now. Americans are increasingly forced to live on debt and our debtors laugh all the way to the bank with the interest.

  7. "In March 2018, U.S. consumer debt rose 3.6 percent to $3.873 trillion. That surpassed last month's record of $3.863 trillion.

    Of this, $2.847 trillion was non-revolving debt, and it rose 6.0 percent. Most of the growth comes from education and auto loans. It shows school debt totaled $1.521 trillion and auto loans were $1.118 trillion.

    Credit card debt totaled $1.027 trillion in March, decreasing 3.0 percent. It exceeded the record of $1.02 trillion set in April 2008. But credit card debt is only 26.5 percent of total debt."

    https://www.thebalance.com/consumer-debt-statistics-causes-and-impact-33...

  8. The last line of wcdessertgirl's girl is especially telling. The explosion of private debt starting in 1996 was what enabled Nouiel Rubini and Ann Pettifor to predict the crash of 2008 while other economists missed it.

    You can see this at https://tradingeconomics.com/united-states/private-debt-to-gdp
    if you set the range to max.

    Now private debt has come down a bit since 2008. but it is still way, way above what it was in 1996.

    Private debt is deadly, because excessive amounts put a big strain on the banking system which is what happened in 2006 when it would have crashed as in 1929 if the FED hadn't poured TRILLIONS into it. But the result was not pretty.

    We have to get more money to the private sector, to people, businesses and state & local governments. Since the only way to create this money besides the banks is thru the federal government, we need it to spend a lot more than it taxes on projects that need to be done (infrastructure, research, education, etc.) and will get money to the people who need it and will spend it, not to the people who do not need it and will use it to speculate. Since these projects will enable us to produce more goods and services to soak up the new money, there will not be much inflation.

  9. Tell you what, I'll give you a break. You don't have the first idea about why the "head tax" in Seattle was overturned. I was not threatened by Amazon or anyone else. I was threatened by our city council who think that the way to end the homelessness crisis is to throw more money at it without accounting for how they have spent the $200M a year that they have wasted so far. The council overturned it because we, the voters and taxpayers of Seattle, stood up and threatened their reelection. 80% of registered voters were against this tax. 80%, in Seattle, is a majority.

  10. Just wait until all the tariffs kick in, and finished cars, washers, dryers, power tools, and the like shoot up 25%. And, anything made form steal and aluminum also increase 25%. Salaries will remain stagnant, employers will start to contract, and we will have what we had in the 1970s; stagflation. All that is needed for energy prices to shoot up, then you will have a repeat of the Carter and Reagan Administration.

    In the 1970s, US dependence on mid east oil fed stagflation; the Arab Oil Embargo. Today, it is poor leadership of a inept president and his staff. And, a Federal Reserve leadership that is in the pockets of banks.

    Oh, I left out, today all consumer credit card rates just went up .25%, and will go up .50% by years' end. Meanwhile, interest rates, on savings remain under 1%. The banks continue to make large profits, and now will be able to make more, because of weakening of Dodd-Frank (making risky investments the led of to the Great Recession).

    The Fed needs room to lower interest rates, when Trump's economy comes crashing down. And, the "too big to fail" banks need another bailout. And, Congress decides the the newly unemployed will need to work for their benefits; benefits already cut by a number of red states. In addition, to cutting so called "entitlements", to keep the tax cuts intact. This time they will call this the Great Depression II.

    In 2020, politicians will be running on "two chickens in every pot" and 2930s level unemployment.

  11. The the 1970s, this nation was waging a war in Viet-Nam that cost a lot of money and relied on cheap fuel supplied by OPEC nations. As that war wound down, that money was gone, and OPEC, who lost that cash cow, first began to choke off supply and then turned to a full-on embargo in order to shrink supply to the world market and raise prices. And it worked. It threw the world economy into economic spasms by permanently hiking the cost fuel worldwide.

  12. "The Fed needs room to lower interest rates, when Trump's economy comes crashing down. And, the "too big to fail" banks need another bailout. And, Congress decides the the newly unemployed will need to work for their benefits; benefits already cut by a number of red states. In addition, to cutting so called "entitlements", to keep the tax cuts intact. This time they will call this the Great Depression II."

    I was getting ready to write the same exact thought. ;-)

  13. Let's see how happy the angry voter is in a couple of months... homelessness is up in a lot of states with jobs that don't pay a living wage and rents that have gone through the roof...

    ---

    www.rimaregas.com

  14. Is the angry voter ready to vote for whoever represents democrats, instead of abstaining, and ultimately ushering Trump his alt-right minions into office?

  15. This is still by far the slowest Fed interest raising "cycle" in over 50 years, and comes on the heels of many years of its zero interest rate policy and up to $4 trillion of "quantitative easing". By contrast, the Fed raised rates at a pace of 0.25 points eight times per year (at each of its eight annual meetings) from 2005 through 2007. The Fed has now raised its rate by 0.25 points a total of 7 times over the past 20 meetings going back to Dec. 2015. Given this extremely slow pace of increases and the remaining presence of trillions of dollars in QE, is the economy still so "fragile" that the Fed has to act so slowly, or has Wall St. (the "entity" that emerged virtually totally unscathed financially and legally from the financial debacle it caused) so totally captured the Fed, Congress and the executive branch that it totally calls the shots?

  16. I get what you're saying, but what's the rush?

    There's value in slow and steady because you maintain predictability and stability while giving yourself time to measure the effects of changes.

    An economy is a marathon, not a sprint.

  17. Yes. The economy is very rosy. Especially on both coasts. In large swaths of flyover country? Not so rosy. Does anyone in government other than Bernie Sanders ever get out of their own bubble?

  18. Oh, please. What ails flyover country has been a topic of discussion for years. Not everything is rosy on the coasts - things are rosy only for the uber-wealthy. You guys picked Trump - we are all screwed.

  19. Wages stagnate as interest rates rise. What will this mean if it carries on?

  20. It, coupled with idiotic tariffs and compressed wages, will mean a terrible recession. That's what. Let's hope that it comes about six months before the 2020 elections.

  21. Keep it going as Trump's red ink becomes a tidal wave.

  22. They'd better jack those rates up fast so they have something to use to soften the landing when the Trump cabal crashes the economy!

  23. Nevertheless the data pertaining to core inflation are still suggesting just one (0,25) rate hike for this year, signaling additional rate hike would be aimed in order to push up the inflation expectations.

  24. This is good news. While I will have to pay more for a mortgage when I apply in a couple of months, continued expansion and decreasing unemployment is a good thing.

    Thanks Obama!

  25. Thanks, Trump!

  26. We haven't seen Trump's economy yet. When it comes it won't be good.

  27. Trump is riding on Obama's coattails. That will end soon. He is also trying to destroy Social Security, Medicare and Medicaid while alienating our neighbors. I never thought I wold live to see this.

  28. I'm glad my parents helped me buy a town house a few months ago, because the economy nor interest would allow me to even rent an affordable place anymore.

  29. A typically snide comment from Canada, our sworn enemy. If only all nations were as peace loving as North Korea!

  30. A tax cut during a time of very low unemployment may increase inflation faster than the Fed can quell it. Stockpile Ben Franklins now for your 2019 milk and bread shopping!

  31. Companies are using the tax cuts to give dividends and buy back stock. So, very little is entering the economy. Consumer spending is what is keeping the economy going. But, when those tariffs start to hit, consumer spending will drop like a stone. You better buy that large purchase (car, major appliance, HVAC system, re-carpet, etc., before the tariffs hit. Trump, when he id does, is going to recreate what Reagan called the "misery index", double digit inflation, unemployment and borrowing rates. And, forget about carrying debt on credit cards, which now exceed well over 18%. The only good thing about this will be higher savings rates, though your salary will not keep up to save anything.

  32. Gotta keep people like Steve Mnuchin happy.

    Never mind the rest of us.

  33. Last sub-heading:

    "There be more news conferences"

    Did Ivanka write that?

  34. Pft.

    Now it's been corrected.

  35. The Great Trump Recession is coming.

  36. A statement released at the end of the Fed’s two-day meeting took several steps to show officials no longer view the United States economy as needing a boost and are instead beginning to worry more about the threat of inflation.

    “The economy is doing very well. Most people who want to find jobs are finding them,” Fed Chairman Jerome H. Powell said on Wednesday at a news conference. “Ongoing job gains are boosting wages and confidence.”

    Officials noted that economic activity has been rising “at a solid rate” — a change from their May statement, when they called the rate “moderate.” Quarterly economic projections released at the meeting showed Fed officials expect the economy to grow at a 2.8 percent rate this year, up from a 2.7 percent forecast in March. Officials also now predict the unemployment rate to dip to 3.6 percent by year’s end, down from a forecast of 3.8 percent in March.
    ___
    And Pelosi will say? La La La La La La La La

  37. “The economy is doing very well. Most people who want to find jobs are finding them Fed Chairman Jerome H. Powell said on Wednesday at a news conference. Ongoing job gains are boosting wages and confidence.”

    Tell that to Joe six-pack, especially the ones who voted for Trump and are still looking for a job. Your post is a good example of the old adage that figures don't like but liars figure.

  38. What are the implications for interest on the national debt?

    Was the added interest expense taken into account in the projections prior to the tax cut?

    Something tells me that the incremental payroll taxes from lower-wage jobs being filled isn't completely offset by the income tax reduction for billionaires and corporations...

  39. There is very little impact on interest on the national debt from rising short-term rates. Longer term rates have been rising more slowly than short term rates. While the mid-point of the federal funds rate target range has increased by 1.5%. from 0.125% on December 16, 2015 to 1.625%. before today's announcement, the rate on 10 year treasuries has only risen by 0.66%, from 2.30% then to 2.96% yesterday, and on 30 year treasuries by 0.07%, from 3.02% to 3.09%.

    In addition, almost all of the federal debt held by the public is fixed rate and at the end of 2017 the dollar weighted average remaining maturity was 69.6 months, so it will be September 2023 before half the debt held by the public then is refinanced at new rates. In some cases the new rate will be lower since we are still paying 9% on some of the debt issued back when Reagan was president.

    That said the Treasury conducts funding with no input from the Fed and the Trump administration, instead of locking in low long-term rates, is increasingly borrowing very short term. That is the reason the the Fed only raised interest on reserves by 0.2% instead of 0.25% today. The very short term borrowing by the Treasury has been putting upwards pressure on overnight rates.

  40. How much many was the defense budget? How is the housing market doing? And the plan is to build two more 9 billion dollar aircraft carriers. And of course unemployment is low so raise the rates. What am I missing?

  41. “…Most investors now believe three things about the Federal Reserve, money and interest rates. They think that the Federal Reserve is artificially depressing rates below what would be a "normal" level. They believe that in the process of doing so the Federal Reserve has enormously increased the supply of money and they believe that the USA is on a fiat money system.

    All three of those beliefs are incorrect. One benchmark rate that the Federal Reserve has absolute control of is the rate paid on reserves deposited at the Federal Reserve. That rate is now 195 basis points, after being zero since the inception of the Federal Reserve in 1913 until recently. If the Federal Reserve had left that rate at zero t-bill rates would now be even lower than they are now. The shortest t-bills rates would now probably negative.

    Money is what can be used to buy things. Historically money has first been specie (gold and silver coins), then fiat money which is paper currency and checking accounts (M1) and more recently credit money. The credit money supply is what in aggregate can be bought on credit.

    The effective money supply is the sum of the traditional fiat money aggregates plus the credit money supply. Thus, despite the claims of many to the contrary, the effective or true money supply has fallen drastically over the last few years….”
    http://seekingalpha.com/article/1514632

  42. This is correct, but I don't expect anyone without at least a bachelor's in economics to understand it.

    The collapse of credit means the body economic has leeched lifeblood, and raising interest rates is accelerating the blood loss.

    What it boils down to is this: recession here we come.

  43. Great economy? I read in the Times editorial page it’s the worst ever.

  44. Interesting. I haven't a raise since I started my job three years ago. Nobody at the corporations that employ people are giving raises. Meanwhile, interest rates are going up.

  45. I see the market peaks this past January, and subsequent immediate melting away into a very volatile state as marking the official end to the decade long Obama's recovery of the republican caused market crash in 2008.
    I see the nascent market run up as the beginning of the inflation of next market bubble due to the repeal of the Volcker rule. This made a huge pool FDIC insured depositors money available once again for reckless proprietary trading (gambling) by a very small exclusive club of rich guys - again as in 2008 privatized profit, socialized losses.
    Speculation: the next crash will occur sometime after the midterm election, and before the 2020 presidential election.

  46. Yes, recessions occur every 7-12 years. We are due for one.

    I'm expecting it in mid 2019.

  47. More interest to be charged to Trump's exploded national deficit for millionaire tax cuts and spending increases for dumb walls and military bloat.

    Brought to you by our Bankruptcy-Filer-In-Chief and Grand Old Plunder

    https://www.forbes.com/sites/stancollender/2018/04/08/trump-trillion-dol...

    "Don't worry, just charge it to the middle class and the poor."

    TRUMP & the Grand One Percent 2018

    Nice GOPeople.

  48. On the wage "puzzle" no one seems to have paid much attention to Personal Income reporting coming from the Bureau of Economic Analysis. In their most recent report released on May 31, they show that in the first quarter of this year wages and salaries rose at a seasonally adjusted annual rate of 5.7%. Wages and salaries increased more rapidly than any other type of personal income. The increase for Q4 2017 was revised upwards to 4.9%.

  49. Declining unemployment is good. But its only ONE number by which to assess the economy. You can have full employment and still have too more and more working people in poverty.
    In fact, salaries are flat, and total compensation is down. Since defined pension schemes are being replaced by saving schemes. The trend to contract and part-time jobs is increasing meaning no paid vacations nor sick days.
    Don't know why the Feds are increasing Interest Rate now. The uptick in consumer spending is obviously from tax cuts. Its not an investment in the US economy. Just people buying more Chinese junk.

  50. This is more 20th century style economy cheerleading by the New York Times. The economy is only growing for a tiny percentage of oligarchs who have commandeered it. Everyone else's economic 'security' is becoming dramatically more brittle under steadily increasing real costs for life's most basic necessities like food, housing rental, and transportation. The larger implications of mushrooming student debt, skyrocketing home prices, and medical bankruptcy raise this strain by an order of magnitude. But many thanks to the New York times for the cheerful skewed delivery and misleading feel-good adjectives that riddle this article.

  51. You know a country's healthcare costs are out of control when Vice President Biden and his wife, Jill, had to consider selling their home to cover their son's medical costs. If a vice president and his wife (who has a Ph.D) cannot afford healthcare, what hope do the rest of us have.

  52. Mixed news. At least Trump’s economy is doing well. Dr. Krugman was wrong again.

  53. Tax cuts for the rich are like giving speedball to a starving man. He might get lively and feel good for a little while, but...

  54. This is not Trump's economy. He is still riding on the wave of Obama's economy. It has been posted elsewhere and many times. Soon that will end. And it will be a painful end as Trump's laws begin to take shape. Enjoy this while you can.

  55. Show us there is a significant reduction in the gross economic inequality, then you can talk about having a 'great' economy. This aside, have you looked at the group of folks that stopped looking for a job, bringing down the unemployment rate to a number not at par with reality? Further, any thought about the ill effects of our huge debt, payable by our grandkids, due to the profligacy of these Trumpian times, and contrary to the deficit hawks' aims? Can you smell some hypocrisy here? Will raising interest rates increase consumer's cost of borrowing, investing? How about the stagnant wages when all goods and services will cost more? Accurate information is of the essence. Would the Consumer Protection Agency, disemboweled now, return to it's original design, as Mulvaney's farce is uncovered? We ought to know that the 'Fed' remains independent and dependable, and not move perilously at Trump's whims, to our loss.

  56. In general this is good news. The types (and wages) of these jobs is suspect though.

  57. My adjustable rate mortgage went from $972 to $1222 last month, even before the proposed rate increases, and even before voters added yet another $150 parcel tax to the $10K I already pay to the county.

    I'm trying to make a living here on a small pension and social security. My out-of-pocket health costs doubled this year, but the Republicans just had to give rich people a big tax break.

    Republican economic philosophy is a ludicrous concept.

  58. Yikes!
    You're paying on an ARM mortgage in retirement, with your income limited to SSI and a small pension.
    May I suggest you re-evaluate your finances and seek to downsize your housing costs ASAP.

  59. Bad decision to take an adjustable rate mortgage. Did Trump make you do that?

  60. @Occupy, if you have a pension and are eligible for SS, you should be at least in your 60s, why did you still have an adj rate mortgage? Just curious

  61. Okay Trump, businessman in Chief; how about looking at the balance sheet.
    Income
    Expenses
    Debt
    Assets
    Future financial commitments.

    Color this page in red ink as our deficit explodes without a tax base (income) to pay for the current expenses, the future ones (as we go it alone in the world) or even to service the debt on our books. Does anyone have the whole picture? I ran a couple of small companies and Trump and his economic enablers makes me feel like a "genius". If not a genius, than at least an honest man willing to talk to my partners in a transparent way.

    This is not going to end well.

  62. "The rise in consumer prices over the last year has effectively wiped out any wage increases for nonsupervisory workers, the latest Consumer Price Index data suggest. That is odd for an economy with a tight labor market, with unemployment running at a 3.8 percent. "

    Sounds like employers have borrowed tricks from Landlords, realizing that if they cooperate, they can keep wages down for all workers. Can't flee to a better job for better pay if the pay sucks everywhere!

  63. That’s what you get under a sustem that killed off all the unions.

  64. Great reporting! Lead sentence reads in part...

    "The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday and signaled it will raise rates two more times this year"

    Then buried in the ninth paragraph is...

    " It was widely expected and brought the Fed’s benchmark rate to a range of 1.75 to 2 percent."

    You guys are competing with TV/Radio/Internet news. I can guarantee you that every talking head would have said, "The fed raised the interest rate today one-quarter of a percent which takes it into the one and three-quarters to two percent range."

    In fact, I'm not sure the above quote shouldn't have been your headline. Your goal should be to make it easier for readers to get the facts, not harder!

  65. Fed Chairman Jerome H. Powell said on Wednesday at a news conference. “Ongoing job gains are boosting wages and confidence.”

    Mr. Powell called the slow wage growth “a bit of a puzzle” saying the Fed “certainly would have expected wages to react more to the very significant unemployment rate.”

    “Everywhere we go we hear about labor shortages, but where are the wages?” he said. “It’s a bit of a puzzle.”

    So which is it? One minute he's talking about '..boosting wages....' and the next minute he's wondering where are the wages? Sounds to me like he was wanting to paint a rosier picture...but ran out of wage growth paint.

  66. Almost all credit cards are now indexed to the the Fer interest rate. Which means most people will see a .25% rise in their interest rate on their cards very soon. They can also look to a .50% rise on those rates by the end of the year. Bad for the middle class.

  67. Honestly this is the really weird thing about Americans ... credit card debt. If you don't have the money don't buy it, save for it. There is no greater rip off than credit card interest rates.

  68. Oh, no. The interest rate rise will be at least double the Fed rate.

  69. When the next Great Depression hits, it's going to be a doozy: For instance -- "In an article dated June 4, 2017 at Marketwatch, total consumer debt set a new record at $12.7 trillion. Americans now have the highest credit-card debt in U.S. history." Highest credit-debt in U.S. history. Even higher than when the Great Recession was declared toward the end of 2007 and then the devastation that followed in 2008, 2009, 2010, 2011, 2012...and from which millions of Americans have yet to recover, and now, given the driving force in today's United States of greed and blaming victims for their problems, probably never will.

  70. Is it just me, or does anyone else see a disconnect between the current yield curve and the Federal Reserve's intent to raise the federal funds rate to 3.5% over the next 1 - 1.5 years at an even faster pace then they have been to date? With 30 year treasuries yielding 3.1% as of this afternoon, it seems that the Federal Reserve wants to significantly increase the nation's borrowing costs by putting indirect pressure on long term rates! Why would anyone buy 30 year treasuries at 3 - 3.25% when they can park their money in a money market fund yielding the same amount? Therefore, (unless we have a recession beforehand) if the Fed continues their current trend long term rates will almost certainly have to go up. And with it goes the interest paid on our national debt burden. Is the Fed wearing blinders? Or am I missing something?

  71. https://www.federalreserve.gov/aboutthefed/fract.htm

    About the FOMC

    The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.

    The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

    Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.

    (my) transaltion: the Fed is worried about inflation....

  72. The only people who care about debt are those who will be burdened by repaying it - and that's not anybody on the Federal Reserve Board, not a single soul in the Trump administration, and not a single soul making over $500K a year.

  73. Pride cometh before a fall . . .

  74. Hold on here, if the economy is so great, why the overarching need to attack longtime allies over trade?

  75. Because that is what insecure narcissists do

  76. The US economy is always in "great shape" until the Fed raises interest rates, and then it gets sluggish.

    When will Americans (excepting anyone working for the NYT) realize that the Fed has absolutely positively no concept of what a "correct" interest rate is? And it never will, either, because it has no measurement stick of interest rates.

    Read Hazlitt's "Economics in One Lesson" if you really want to understand the economy.

  77. I'm glad to see interest rates clawing off the floor. In the next recession, we won't want monetary policy completely expended before the fact.

    The interesting point to note though, and what the Fed will never say aloud, is the Republican tax bill just dumped a huge fiscal stimulus package on a growing economy with little economic reasoning. Fiscal policy just fired all rounds at a blank wall. Meanwhile, the important qualifier to Powell's assesment is "most people who *want* to find jobs," emphasis added. The phrase is very nebulous in the parlance of economics.

    At best, the Fed is secretly concerned the economy is over heating. Tariffs and trade wars obviously don't help inflation either. At worst, the next crisis is already on the radar and the Fed is steeling themselves because Congress has bankrupted the federal government's ability to intervene. Despite the rosy presentation, there's definitely a fear lurking somewhere behind our monetary institution's pleasant interpretation.

  78. Fiscal stimulus? For whom, pray tell? The top one percent, for certain. For me and my retirement income of $30K a year, nada. In fact, I will actually pay more in federal income taxes this year, thanks to the loss of the personal exemption, that's $4,060 poof, gone, just like that.

  79. Mr. Powell seems to be out of the loop with average Americans, and quite out of touch with the news in the past year.

    Yes, the economy has boomed for the wealthy, their investments, and rich multi-nationals.

    But, for Mr. Powell's benefit, the CEO's of these vast multi-nationals, after receiving their huge tax break from Trump, repeated, when asked -- and they were asked a lot -- that they would not raise wages and would instead fold the cash into their companies or into investments.

    3.2% unemployment is not exactly the correct figure, either, which Mr. Powell would know if he read the monthly National Labor Relations definition of employed;

    "Employed persons: All persons who, during the reference week, (a) did any work as paid employees, worked in their own business or profession or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of their family"

    So, 1 hour of paid work during the survey week means a person is employed. Which leads to false unemployment figures. When they say "reference week", they're talking about the week of the NLB's monthly survey.

    Few are finding jobs that can pay the rent. Two part-time, minimum wage jobs buys slum life, and inability to pay off college debt or raise kids.

    With employers hanging onto their bucks, offering low wage salaries, and ICE hunting down farmworkers, the economy for the wealthy, for investors, is super, but for the average person, not at all.

    Wake up, Mr. Powell

  80. This economy is still working well for some people far more than it is for others. Let's look at growing inequality, loss of health insurance, environmental degradation, under resourced schools before we decide the economy is in "great shape."

  81. It seems pretty obvious that the Chairman of the Federal Reserve doesn't do his own grocery shopping, he'd keel over at the cost of something like a pound of ground beef or an imported (lots from Mexico) tomato!

  82. Not a good idea. With all that outstanding credit card debt and the unpaid car loans while pay remains stagnant the next debt bubble is about to burst.

  83. I'm retired now. For most of my career, every dollar of annual raises increased your base salary. That's a far cry from the change in raises at the end of my career. Most of our annual increases became excessively stingy and were one time awards that did not add to your base income. On the other hand, raises for non-managers remained business as usual. They continued to bestow themselves grotesquely greedy increases.

  84. Anyone notice a pattern here? Republicans (W) deregulate and there's a cash grab by GOP interests and then Dems come back to power and rebuild the economy (Obama). Trump is benefitting from the recovery that Obama's team implemented. The economy doesn't just turn on a dime within a year-and-a-half. And what's happening right now? Deregulation across the board as special interests loot what they can before the next crash they'll cause.

  85. How could it be we have a great economy according to the Federal Reserve when Paul Krugman assured us the stock market would collapse, the economy would go into deep recession and the GDP would never go over 2% once Trump was elected? (the Atlanta Fed is saying GDP so far is 3.8%) Paul is never wrong. He always knows economics and who the quislings are in government (and they're always Republican, too). Say it ain't so.

  86. Then I guess the current trade situation is not all that bad and needs no "help" from destructive tariffs and other isolationist proposals,

  87. Great economy, some how my neighbor who is working 3 jobs to pay the bills might not agree with that statement.

  88. Sounds like your neighbour is living beyond their means. What sort of jobs are they? It seems highly circumstantial and likely could have been brought about by your neighbour’s personal situation rather than something to link to the national economy.

  89. Absurdly low rates. Although the way we measure inflation does not capture it, there is outrageous asset inflation. House price bubble again in some areas etc.

    This matters because asset price bubbles pop, triggering financial crises in the real economy. So the Fed by keeping rates too low too long, way too long, will contribute to higher peaks but longer and more damaging troughs of the b-cycle.

  90. So Congress passed, and the President signed, the tax cuts with the stated goal of pumping up the economy. Predictably, the Fed is now raising interest rates to cool the economy. So maybe the real purpose of the tax cuts was to cut taxes on the rich, not pump up the economy.

  91. The Obama Boom continues, with job creation during Trump's first 16 months below Obama's last 16 months, but still very good job creation. Unemployment continues falling as it has since 2010, with steady improvement in labor force participation for the 25-54 prime age group for the past several years. About half of the non-participating men in that age group are outside the labor force due to illness or disability, while half the women are out due to caregiving.

    Real wages are close to zero, as the article points out. Labor has far too little power relative to capital. So despite huge increases in corporate profits thanks to tax cuts mainly benefitting the wealthy, little is going to workers.

    However, the deficit/change in debt is way up (+$4.3 trillion or $34,000 per household vs. Obama baseline over 10 years), the number of uninsured is way up (+4 million, on its way to +13 million vs. the Obama baseline) thanks to ACA sabotage, and the trade deficit (+10% year-to-date) is also heading the wrong direction.

    Europe is busy reducing its debt to GDP ratio, the standard Keynesian approach in a Boom. However, the U.S. is headed the opposite direction, adding significantly to its debt to GDP ratio, again due to tax cuts mainly benefitting the rich.

    Ah, if only Trump had pulled a Clinton and simply let the Boom continue without meddling in it.

  92. Reading the comments below, an old economic saying comes to mind: The macroeconomy is doing great. American workers and small business owners, however, continue to be worse off.

  93. Sittting out here in California, full time worker and closing in on my retirement years, having not seen a net increase in wages for a decade. The economy is not booming for me. Corporations and the rich are doing swell, but this rate increase is but another financial blow for millions of struggling at the bottom.

  94. The Federal Reserve is the reason we've had cycles of unemployment and bubbles, and the reason we've had a 20%+ unemployment in the 80s - it should be eliminated.

  95. Where are the wages? They're going into stock buybacks. In other words they're flowing to bloated parasitical equities investors, like me.

  96. While this is all economic puppies and rainbows, what is more of a 'puzzle' for me in reading this article is the use of the word 'puzzle' by the Fed Chair. The Fed Chair is a very bright man, surrounded by very bright people. I suspect it is no 'puzzle' at all why wage growth has not accelerated to a rate we might expect with all of these economic puppies and rainbow. If that is true; then what are you not telling the American public yet are communicating to the moneyed people of the markets and financial institutions?

    It is 'puzzling', is it not?

  97. The Obama Boom continues, with job creation during Trump's first 16 months below Obama's last 16 months, but still very good job creation. Unemployment continues falling as it has since 2010, with steady improvement in labor force participation for the 25-54 prime age group for the past several years. About half of the men in that age group are outside the labor force due to illness or disability, while half the women are out due to caregiving.

    Real wages are close to zero, as the article points out. Labor has far too little power relative to capital. So despite huge increases in corporate profits thanks to tax cuts mainly benefitting the wealthy, little is going to workers.

    However, the deficit/change in debt is way up (+$4.3 trillion or $34,000 per household vs. Obama baseline over 10 years), the number of uninsured is way up (+4 million, on its way to +13 million vs. the Obama baseline) thanks to ACA sabotage, and the trade deficit (+10% year-to-date) is also heading the wrong direction.

    Europe is busy reducing its debt to GDP ratio, the standard Keynesian approach in a Boom. However, the U.S. is headed the opposite direction, adding significantly to its debt to GDP ratio, again due to tax cuts mainly benefitting the rich.

    Ah, if only Trump had pulled a Clinton and simply let the Boom continue without meddling in it.

  98. The economy is "great and growing" for which sector? The folks who are among the employed (full time? in a field of their choosing? at a decent salary?) whose salary hasn't seen an increase in years?

    And just when will savings interest rates go up to match the rising charged interest rates? Funny how banks charge more immediately, but where is the news on higher rates for those who are able to save a couple of nickels after their monthly expenses? It's all lopsided in favor of the American oligarchs.

  99. Seriously, anyone that doesn't understand why REAL ADJUSTED WAGES aren't increasing needs to get a refund on their economics degree.

    Its simple: Greed. It really is that simple. From 1920-1979 the culture of this country was one in which labor got what it was owed. If a person worked an honest days' work, the person would get an honest days' pay. Then came Prophet Regan and "growth" economics.

    He brought the false promise that so long as the economy grew, everyone would. For the longest time, the argument in favor of this formulation was that even the poor, while not benefiting as much as the rich, benefited from the growth.

    But the ranks of the poor are growing, not shrinking. The raises in terms of REAL ADJUSTED WAGES for the bottom 50% of society for years have been measured in fractions of percents, and sometimes in losses.

    Even if the bottom 50% of earners saw raises of 1-2% above the CPI inflation, it would take a century just to recover the losses represented from the unjustifiably low increases from 1980-present. But, and its no secret, the rich got and continue to get exorbitantly richer.

    In 2017, the estimated amount of wealth sitting in tax shelter accounts overseas was over $2.6 Trillion. Yes, an amount of money equivalent to 13% of the GDP of the United States sits in tax shelters for NO OTHER REASON than greedy corporate execs don't want to pay taxes on it. No other reason. And they can't give US workers a raise commensurate with their output? ◔_◔

  100. has anyone ever checked the relationship between the increases of in wealth amongst the corporations and wealthy when ever the Fed raises interests rates ??

  101. There is a reason why we have largely kept politics out of the Fed chair position for decades. I suspect that we are about to find out why. Lack of wage growth is "a bit of a puzzle." I doubt that it is a puzzle to the tens of millions of Americans that depend solely on wages for their source of income. We need more in-depth analysis from the Fed, and if Chairman Powell is not willing or able to provide it, then perhaps he can restrain himself and communicate once a quarter.

  102. Managing a "soft-landing" without stagflation becomes all the more difficult if we disrupt trade, reduce immigration, and defund science.

    It may not happen until after the next election or two, but Trump's paranoia on trade and immigration is setting us up for stagnation, not growth.

  103. "Most people who want to find jobs are finding them,” yet the Fed is "puzzled" by the lack of wage growth. Millions of talented people below retirement age want but cannot get jobs despite years of diligent searching. Why is that statistic seldom mentioned in connection with unemployment? Maybe stagnant wages are caused in large part by the growing number of experienced, older, professional workers who earned high wages but now can't get even a minimum-wage job. We are disregarded as irrelevant relics while the wealthy expand our economy.

  104. Maybe the job creators are not investing in their companies. Instead, they are buying back stock to bloat the stock indexes, paying higher dividends, increasing bonuses to themselves, and playing at takeovers. None of that is productive.

  105. We should have two un-employment rates; one for the 18-49 age group and another for the 50 workers. Then let's talk about the economy. And only count full-time jobs - not working one hour as is stated here.

  106. It would be encouraging to see the Times express more awareness that wage increases are a human choice, made by managers, and not the result of some automatic reading of economic factors like barometric gauge. Do farmers in CA raise wages to get American laborers or do they just leave wages where they are, counting on desperation to provide the needed waves of illegal immigrants? Please stop peddling the ideologies that disempower workers by masking political struggle. Employers raising wages isn't any more automatic than republicans confirming Merrick Garland. Stop repeating the lies.

  107. Workers can make choices, too. Not sure why you think they would be disempowered by an article in The NY Times.

  108. The "great" economy was put on its track by the Obama administration and its 7.5 years of steady growth.

  109. Whoever thinks this economy is great does not have a teacher's salary, student loans, and live in NYC. The disconnect between the 1% running our country and the rest of us is stark. Sadly, the virulent racism in this country will ensure that nothing changes.

  110. Instead of raising rates, why not increase regulation?

  111. If the economy is so "great," how come an American earning $15.00 an hour (a little less than 2x the current Federal minimum wage) cannot afford to rent a two bedroom apartment ANYWHERE in the country? And I'm not talking about big cities - I'm talking ANYWHERE. Just read an article about this at WaPo.

  112. The economy is growing, but the average consumer has a decreasing disposable income that will ultimately lead to a fall in consumer spending causing a recession. It is ironic that the oligarchs that control our economic policies are sewing the seeds of a severe economic downturn by sucking as much capital as possible from everyday Americans in the form of low wages, inflation, and debt (both private and public). This is conservative economic policy. How many times do we have to get burned before the average Republican voter figures this out?

  113. Frankly, I would be happy to see an end to the garbage economy. IMO spending less on junque everything -- would be a good thing. Reuse don/t recycle

    Problems are housing... enormously overpriced and transportation - ditto.

    Luxury tax for the oligarchs.

  114. I'll tell you where the wages are. Supreme court decisions have restricted worker movement by supporting non-compete clauses and worker (and other) redress by supporting arbitration. Thus companies don't have to pay workers as much or give them raises.
    Also, since workers collect food stamps, use Medicaid, and live in subsidized housing, and the minimum wage is half what it should be, companies can pay less and give less benefits while workers survive. Making people work to get benefits will make this worse.
    I am certainly not suggesting that we take these benefits away. But employers, not taxpayers, should have to pay for them.

  115. I was downsized” during the recession when in my 50’s. I’ve never gotten back to my high salary in 2010. Hire me now? No way. One interviewer told me I wasn’t bubbly. No, I said, I’m a professional. Or I was overqualified. It’s gotten to the point where I’m turning 62 in two weeks, have filed for Social Security and working part time for an organization I believe in. But my computer and critical think skills are above par. I couldn’t get a job. I decided to stop, and look for my niche. It doesn’t pay a quarter of what I used make. Great Economy.

  116. One of the less discussed consequences of our most recent financial meltdown is the time value of money -- interest rates -- which has been close to zero for the last ten years, and now barely exceeds inflation. The Fed has kept interest rates at an artificially low level to stimulate growth. But the real-life consequences of this policy are that a generation of retirees who may have lost their IRAs, retirement savings, and/or pension benefits in the crash have not been able to realize any significant returns on fixed income investments or annuities purchased in the last ten years. It wasn't unusual to get five percent on your money market account: you'd be hard pressed to find a short-term investment grade bond that paid that today.

    Social security, Medicare, Medicaid that seniors rely on for indigent long term care, consumer protection, are all on the Republican chopping block. Couple that with paltry returns on conservative investments and you have a perfect planned obsolescence solution to the problem: survival of the fittest.

    Meanwhile, back in the jungle...remember where you are when you vote in November.

  117. The economy would be even "greater" if instead of cutting taxes, taxes would have been eliminated altogether. These people are confusing an economy high on irresponsible spending (which is what tax cuts for the super-wealthy are, from a budget standpoint), with a "healthy" economy. Just what can be expected from some of the most mediocre "economists" in the land.

  118. "Lack of wage growth" is only a "a bit of a puzzle" if one persists in the delusion (or perpetuates the fraud) that wages are dictated by laws of supply and demand without any role for free will of the corporate masters. Since the 1970s when it looked briefly as though an egalitarian society was at least somewhat approachable, the global elite have retrenched and waged class war. They have systematically depleted unions, workers rights, the general notion of what a "job" consists of and took great advantage of the "Great Recession" to break the spirit of the American worker, who now accepts the crumbs that are offered. The corporate elite will not raise wages even if they could financially benefit from doing so because they want to hold the line and keep the masses in their place. It is not at all puzzling that wages are not increasing in line with "theory."

  119. In addition to the nominal Federal Funds rate hikes, the Fed is selling off $600 Billion in mid- to long-term bonds in 2018 that it purchased during the Great Recession, while the US Treasury needs to sell almost $1.3 Trillion in new bonds to finance the Federal Government and the current deby payments.

    The interest rates required by bond investors to absorb this level of debt is most certainly going up. Current interest rates can only go higher across the rate entire bond spectrum. Get ready for exciting times ahead!

  120. Massive federal debt, continued unbalanced budgets and cheap money finance a "great economy" that has included ever-growing income disparity and massive trade deficits. Economists have now entered the world of Alice and Wonderland where words mean I say they mean

  121. So the Fed chairman says "most people who want to find jobs are finding them." That's puzzling because 63% of Americans eligible to work and who want to work can't find a job that pays a decent living wage that would support even minimal family expenses.
    If the Fed chairman hasn't figured why unemployment is at 3.8% and wages haven't gone up for more than 20 years, then maybe we need a new Fed chairman.
    Obviously the devil is in the details here. Could this conundrum between low unemployment rate and wage stagnation be because corporations are getting by with attempting to pay the lowest wages possible to their workers, while all of the income and wealth is propelled upward to the CEOs and stockholders?
    It's a fact that corporations now value their relationship with Wall Street more than their relationship with their workers. The less they can pay in wages means more profits and Wall Street loves profitability, regardless of how it is brought about.
    Corporations must be made to share some of the increased productivity with the workers and the problem would be solved. Wall Street might be less happy with less corporate profitability but the alternative of continuing stagnant wages will only lead to another financial crisis, such as the one ten years ago.
    If corporations paid a decent living wage, the Fed would not have to prop up corporations for their survival.

  122. I haven't seen a pay increase in 5 years, the economy must be good for the 1% and bankers.

  123. There 4 in my family, nothing here and we lost property tax deduction for entire amount,

  124. A 2.8% growth rate for our economy should hardly be cause for over-the-top joy. China's real GDP growth rate in 2018 is projected to be 6.5%.

    The real question is: how do you convey to struggling middle- and low-income voters that the Republicans' economic policies are actually hurting them, particularly when all they see and hear on TV are the endless lies spewed by the Trump Network (aka Fox "News")?

  125. You surely cannot be serious comparing China’s growth rate with that of the US. China is coming of a massively low base. 3rd world to first world. The US being as big as it is and growing at nearly 3% is phenomenal! This growth rate will provide a huge capacity to materially benefit the US people.
    There are a whole lot of lounge chair moaners here while millions of quiet achievers are out there working your country into greatness.

  126. Last time I looked, folks are still waiting for coal and steel jobs to come back, and the 2 trillion dollars that was parked ashore is still parked ashore where it will remain. Oh, and real wages to reflect the booming economy...that's not happening, those profits are going to shareholders and CEOs. Wait until Social Security and Medicare Taxes go up, then we will see how the 20 bucks you got in this "great tax cut", will be a cheap trick. Of course, if they don't privatize them both to Wall Street and the Banks. You are getting exactly what YOU voted for...misery is around the corner.

  127. By the way, I did not see any (emphasize: none) bump in my paycheck at all from January to May. Human resource personnel told me it’d be about $20 for my modest salary (which is less than what I made in 1995). But I got the same check every payday since the Big Tax Cut.

  128. This is funny. When unemployment statistics improved under Mr. Obama, Republicans did everything they could to discredit the numbers, while Democrats hailed them. Now, Democrats will do anything to discredit the same statistics while Republicans hail them. I for one am not informed enough to express an educated opinion on the subject. I marvel at the “experts” who profess knowledge but whose opinion is really dictated by nothing other than which team is at bat.

  129. It might have something to do with staying in power...

  130. Instead of the Fed giving money at 0.01% to the Banksters, why not use it to pay off student debt, which is a big drag on those who wasted money on going to college just so they could work for $12-15 an hour. Or, they could use it to follow up on Obama's unfulfilled promise to help those whose mortgages were underwater thanks to, once again, the Banksters.

  131. The bread lines in this town are hidden on the side streets; meanwhile, construction workers build luxury housing right around the corner. The “great” economy is a big Potemkin village, just like every aspect of the present fake administration. Nothing they sell is worth having when college- and trade school-educated people over 45 can’t get work.

  132. As a conservative manager of money, I retired with zero debt & planned for a 3% return on savings...when will the savers get a decent interest rate? Seems like the new way is to punish both borrowers & savers. Private equity & big banks rack in the cash.

  133. Greg,

    Gailmd indicated they were retired (and as such, correctly, conservatively invested) and, like myself, growth "over time", opportunities become less appealing. Savers should be able to earn 3% given current loan rates and other investments banks are capable of. With banks earning record profits, there should be better, safe FDIC investments.

  134. In addition to what Greg said, realize that inflation has also been ridiculously low for most of the last 10 years. So you didn't need 3% to beat inflation and prevent erosion of your assets.

    On the other hand, if you happen to live in certain metro areas, local inflation has been high compared to the national average. If you're in that situation, I'm afraid even higher interest rates won't help you. There are structural problems in those metro areas where they are victims of their own success and national policy changes can't address them.

  135. Brick and mortar banks are the worst. If you want an insured CD try an internet bank. You won’t get 3% yet but if you ladder 2-yr CDs you should be able to get more than 2% and you can roll them over at a higher rate over time.

  136. Do you ever get the feeling you are a pawn in a game run by the wealthy and played by their ever changing rules? Rules that the rest of us do not begin to understand. A game where they always win and we always lose. I sure do.

  137. I feel as if I have a target on my back as an economic opportunity to be taken for a ride, not a customer. America feels like a business, not a community.

  138. Gasoline in my area went up on average 50 cent/gal. following our withdrawal from the Iran deal.

    Milk went up around 75 cent/gal. right after the G7 debacle.

    A small Mom/Pop appliance dealer here (and guessing a likely trump voter) told me when considering the purchase of a washer to replace our 15 yr. old model, that I'd better buy before the tariffs kick in. She competes with the big box stores and I saw genuine fear in her eyes.

    This is just the beginning. It's going to get worse. I hope trumpsters realize who picked their pockets when 11/6 rolls around.

  139. Gasoline prices have increased quite a bit here. There is less affordable housing. Companies are complaining that they can't find anyone but I can't find a company willing to hire me and I have years of experience in my field. I can't even get a recruiter to call me back. My car insurance rates went up by 20%. My salary is still nothing and unemployment ran out nearly 6 months ago.

    I feel as if I'm living in an alternate America, one where no one cares about the worker bees and those who are trying to find work. The tax cuts haven't produced anything of value for 99% of us. What I do feel is that I and every other working American have been played for fools.

    We've worked hard and been unable to save money. We've been told that there are plenty of jobs out there but we can't get hired, especially if we're over 50. We've been told it's our fault if we can't get a job. We've kept our end of the bargain. Why can't our government keep its end and do more for us rather than for the rich donors whose tune our senators and representatives dance to to get re-elected?

    I'm glad the economy looks so good to the Fed Chairman. I wish mine and others looked half as good. I don't know about him but my glass isn't even half empty. It's all empty. These are the years I'm supposed to be saving the most and earning the most. Instead of being valued for my experience I'm not even being considered. How does the lack of employment for those over 50 help the economy?

  140. Your gas is more expensive because you live in New York. Your insurance is higher because you live in New York. You didn't benefit from the tax cuts because you live in New York. See a trend here?

  141. You relate this painful dichotomy very well, your post stopped me in my tracks. As I often remind myself in difficult times, "Don't give up 5 minutes before the miracle".

  142. The NYTimes should do a front page piece featuring you and others in your situation. If American were really to be made great again, companies would invest in people again instead of in cheapest production. I hope you have an anchor of self-worth other than this brutal, vicious work environment that techno-globalization has brought us. The young people favored for hire do not realize they'll be played the same way, only faster: as automation and the inevitable creep of techno-change orchestrated by the Big Brothers will render them obsolete in their 30s rather than their 50s. Small consolation but just know, you are legion and you "took the high road" while Washington and Wall Street took the low one. It will matter one day.

  143. An amazingly strong economy. Not surprised by this rate rise at all. It is a clear sign that the US is strong. 3.6% unemployment is incredible by historic standards. The ability for the US economy to get going like this makes it the envy of other nations. Long may it continue.

  144. @ Greg,

    All of the world's economies are performing comparably well. The positive trend in the US economy began in 2009 and has slowly but surely continued apace ever since.

  145. I really wish the financial press would stop conflating "the economy" and "the market."

    There is the stock market and the financial system which are both healthy and making money as if they are printing it. Stock prices are of course driven by corporate performance (profits) and clearly the corporations are doing quite well.

    And then there is the real economy, where people work for wages which have stagnated while prices increase. Even the modest price increases below the "targeted inflation rate" of 2.5% devalue one's spending power if wages do not keep up (and they aren't).

    Yet these brilliant economists are "puzzled" as to why wages stagnate even as we approach "full" employment. Their hypothesis is that as companies grow, they need workers to meet demand. But these economists should open their eyes and look at the real world.

    Most workers don't have specialist skills, and they work in service jobs and are easily replaced. Companies understand that they don't have to pay these workers more than they already do, as the next service job pays the same, so workers won't make a lateral employment move.

    A company that does have specialist requirements will pay more to attract workers, but they won't boost salaries unless there is a local competitor who needs those same skills.

    Businesses who repatriated overseas cash at a low tax rate chose to distribute the money to shareholders, instead of putting it into the real economy -- the wallets of their workers.

  146. 3.6% unemployment implies the exact opposite of workers being readily available to replace existing workers. Part of the problem is that workers have been in a bad spot so long, they've forgotten what it's like to be in the drivers seat (able to demand more money). Younger workers may never have experienced this and don't know how to use it. Fear of returning to the bad times will also make people hesitant to change jobs, as will the fear of losing health coverage now that the ACA is being dismantled from within.

    Corporations will certainly use this hesitation to press for more to their advantage, but it doesn't reflect the reality that labor is tight. My area has a bad shortage of construction workers for example, both the skilled and unskilled ones. Skilled labor obviously has an advantage there, but unskilled aren't powerless. It's also never been easier to acquire knowledge to improve your skill base.

  147. Most of us live on a tread mill that seems to go no where.
    As so many commenters have said they live on several jobs that have little prospect of going anywhere. and when you get a small raise it is eaten up by inflation and higher interest rates which the fed uses to control inflation. We do not have stocks and bonds and can not afford to gamble on them. Our children, our pets and ourselves need some treatment especially dental and pharmacy prescriptions that we pay for with food money. Inflation does not touch the rich because their money is protected by income sources that compensate for inflation, things like higher returns on investments and higher bank interest rates. To make money you need money something that people like Trump and his rich friends forget when they look down on those who work hard just to at least stay in place.

  148. 2.8 GDP growth is more or less "solid" but when did that become
    great?" It seems as if we are living in a new normal where corporate profits are at practically record levels but many if not most workers are falling behind or barely keeping up.

    Trump promised a US GDP in the 3.5 - 4.5 range over multiple quarters.

    The huge tax bill was supposed to trigger phenomenal growth, at least in the short term - it was supposed to release the "animal spirits" in the economy.

    These are supposed to be the times when we are all making hay while times are good and hopefully be on enough footing to live through another downturn.

    I get why interest rates need to go up. This gives the government wiggle room to goose the economy during a downturn.

    The one thing about this continued growth in the US economy is that we have not had a recession.

    I still don't understand why the US is running trillion dollar deficits.

    The Trump administration has practically made it a policy to negate everything accomplished by the Obama administration which they have done - except for bringing back trillion dollar deficits.

    Except this time the US economy is not hemorrhaging jobs and seeing millions of foreclosures.

    Trillion dollar deficits should be the very last resort.

    The economy really will be great when the labor participation rate is much higher, deficits are lower, fewer workers discouraged, fewer people on foodstamps, infrastructure projects are happening.

  149. Don’t hold your breath. We’ve seen this story before and know how it ends.

  150. Wow! Maybe I'll get more than 1% on my CDs. I'm so happy that inflation is under control, as long as you don't count the rising cost of fuel, education, healthcare, food, cars, utilities, and local taxes. Yes, sir, Trump is making America great again.

  151. The 1% keep getting richer, at an accelerating rate mind you, while the 99%, well most of got some kinda job that can’t support one person let alone a family. It’s every man for himself folks.

  152. The Trump boom continues to power on. What do you expect with lower taxes. less red tape. curbs on immigration, ecofreak sanity. and fair deals on trade policy coming. America first and free enterprise work.... and put people rework.

  153. be careful what you wish for......

  154. Trump doesn't mind a trillion and a half more in national debt because he has personally walked out on debt six times. So hey, what's the big deal? Debt so we can have tax breaks for the top tiers. So let the lenders get higher interest in addition to their lower taxes because gheeze the banks are doing so poorly. Trudeau, you wont recognize your neighbors in a few years.

  155. When you cut taxes without worrying where the money's going to come from to pay for things, when you borrow hundreds of billions knowing that someone else (the grandkids) are going to be the ones to pay it back -- of COURSE the economy is going to boom.

    For a while. The Republicans are hoping it'll last through the midterms. Maybe even through 2020. But credit-card living always ends in one way, and one way only.

  156. Increasing rates just makes it harder for the poor and first time home buyers to finance a home. Since the "full" employment is realy just lower wage employment, most folks spend way too much of their budget on housing. This is the White Elephant in the room. We need higher paying jobs, now! That means raising the national minimum wage to $15 an hour. Finally, the fedeal goverrnment has to build way more affordable housing, now!

  157. Unfortunately wages aren't up so this just means inflation for the lower and middle class.

  158. Once again I'll ask the question that is my response to rosy unemployment numbers: How low does the official unemployment number have to get before the legions of workers older than 50 (or 40) jettisoned from the economy during the Great Recession become employable again?

    Remember that the fine Fed folks who set interest rates and issue oracular pronouncements are bankers. They are the 1%. They exclusively represent the investor class, the same people the Greedy Oligarchs' Party represent. They never have to worry about whether their employer will lay them off to "unlock shareholder value," or whether the deductibles, copays, and coinsurance will leave them bankrupt if they have a health emergency. They care about the 99% about as much as they care about the ants they step on as they walk to their limousines to be chauffeured to their next meeting.

  159. Looking at the Fed funds target rate chart says it all. The Fed held down interest rates at near zero for an unprecedented, extended 8 years in a row. During this time just about all major US multi-national corporations hoarded cash like never before, hired less workers, borrowed money at ultra low rates, acquired companies to defend their turf, laid off thousands of workers to cut costs, and last but not least continue to increase their stock repurchasing programs to boost returns. Hence, the most hated bull market in the history of the stock market.

    I fear QE1, QE2, and the Fed’s “operation twist” experiment could come back to backfire and haunt the US economy now that businesses in the US have also been handed a massive tax break when the economy is already rapidly expanding w/ low unemployment. The “inflation genie” may rear it’s ugly head from out of the bottle sooner than the Fed thinks. When that happens it may just be too late to tame.

  160. The time to pay off that 2008 debt, which was utterly critical to take on to avoid a depression, is now, while the economy is back. Instead, the Republicans give us a tax cut and squander the opportunity. America will die by its own failure to make hard choices.

  161. It’s very important to the Fed that wages never rise again in real terms. The danger of most people’s lives’ improving must be warded off!

  162. If interest rates keep going up , the Bush Doctrine Middle East regime change could wind up costing us 3 trillion dollars, and with the Trump Doctrine war over diplomacy approach to the Middle East quagmire, we could be looking at another 5 trillion in war debt. This will not make America Great Again.

  163. The economy s doing great? Not for long.

  164. And so it begins. The economy benefits from the Fed's independent status -- we don't want politicians with axes to grind or constituents to please toying with interest rates -- but the economy suffers from the limited tool-kit the Fed keeps in its shed: up, down, or QE.

    How on earth do we think that such a one-dimensional gardening strategy of the nation's economy can produce sustained growth and prosperity at a desired rate of inflation? The Fed would benefit from more a wider tool kit: taxation and regulatory powers. They can't, of course, and they don't work directly with politicians on monetary policy, so this horrible cycle continues.

    The politicians bark that lowering taxes and freeing markets from regulation will lead to prosperity, while at the flick of a switch the Fed Chairman can extinguish that philosophy in dramatic fashion. If you want to keep prices at their fair market value, pass laws that encourage a fair market, i.e., a competitive one. If you want to encourage economic growth, i.e., give young people an opportunity to buy a home, buy a car, and pay for school, keep money cheap or at least at the same price, so we can plan.

    This ends in market correction, predictably, and no one has the courage to make a change.

  165. The moronic Congress abdicated rational fiscal policy long a go and left the Fed to compensate with largely ineffectual monetary policy.

  166. end the fed and give congress and the treasury those powers. let the treasury print money directly, not take out loans from the fed to do so

  167. Hooray. Burger King is fully staffed. Credit card interest rates are going up. Prices on imported goods are higher because of tariffs. The homeless can sell their stocks and get an apartment. The water in Flint is magically clean. Puerto Rico isn’t bankrupt. Hooray.

  168. Powell is a Trump appointee. He may be principled, but if he issued anything but an over-the-top enthusiastic economic report he would first face a Trump Twitter storm, and then he would be thrown under the bus like so many others in Emperor Donald's court.

  169. Powell just showed how out of touch with most Americans he is. "The U.S. economy is in great shape . . . . Most people who want to find jobs are finding them." Nowhere, however, does he mention salaries and whether or not these workers can afford the things they want to purchase.

  170. The gloom and despair in these comments is pretty funny.

    In November, the GOP is going to run on the economy, and if these comments reflect sentiment on the left, I suppose the Democrats are going to try to telling us that those unemployment numbers, raises, lower taxes, rate hikes, and growing 401Ks, 529s and IRAs are either a fiction, “crumbs,” or evidence that the “rich” are getting ahead and we need to put a stop to all of this so we can get back to the wonderful days of the Obama economy.

    Good luck with that.

  171. There has been an increase in economic activity, to be sure. This has been brought on by tax cuts and government spending incereases, as noted by the Trump appointed fed chairman in this article. These cuts and increases will add over $500 billion to the federal budget deficit this year alone, nearly double what it was originally projected to be (per the congressional budget office). Meanwhile, the average monthly total of job increases has been 190,000 per month vs. 195,000 during the last 12 months of of Obama’s presidency (per the Bureau of Labor statistics). So we doubled the deficit to get the same performance. Duly noted that under Trump we continued the jobs recovery that began under Obama in 2010 at roughly the same pace, largely by greatly increasing our national debt.

  172. Good luck with Trump's tax cut whole country trillions bankruptcy. How to bankrupt the casino in one easy lesson. Cut revenue and spend a lot more.

  173. I love it when real estate agents write in to tell us that we are swimming in the best economy ever. Good luck with that.

  174. I sure which interest rates for savers would rise; nothing like getting 1% or less on a CD, Money Market Account or regular savings account:
    And to think, we once laughed with derision at the ubiquitous 5% annual interest on "passbook" savings accounts.

  175. That couldn't last after the Fed was mandated to tinker with interest rates to affect employment rates by a Congress too grossly juvenile to conduct fiscal policy competently.

  176. The higher interest rates benefit banks and lenders - not the consumer. Our protections are gone so rates can increase without limit.

  177. Many people rightly bemoan limited wage growth, especially at the bottom of the scale.

    And yet they wholeheartedly support offshoring U.S. industries to low-wage countries like China and the large scale influx of low-wage immigrants.

    This makes no sense.

  178. The people bemoaning low wage growth - the average American - are not the same people supporting jobs overseas - 1%ers and some politicians.

  179. Inflation has already outpaced the pittance of a tax break that average and below average income earners can look forward to this year. Add to that the increased cost of borrowing for housing, education, and transportation and a forecast for higher rates in the future and you have a formula for the non-rich to be worse off financially by the time the next tax season rolls around. And these are supposed to be the good times according to Trump loyalists and the faithful promoters of stock valuations as a measure of economic health. What happens when the borrowed stimulus package runs its course and the dbt must be paid back -- at higher interest rates?

    Nothing about this picture adds up to a healthy economy or a secure populace.

  180. The economy is doing great...Trump is preparing billions of dollars in tariffs against China, they will retaliate...Canada is apply 13 billion dollars in tariffs effective July 1st...Mexico is apply tariffs...the EU will be applying tariffs effective soon...who knows who else.

    Trump has said Canada will soon feel the pain of his tariffs against us...i have a feeling the pain is going to be reciprocal.

  181. Looking at a country's finances in a single snapshot is illogical. Instead look at everything including its debt, rising interest rates, regulations that will catch widespread fraud/calamity, a tax cut unpaid for, etc.

    The economy is momentarily fine, but stocks are in a bubble, corporate debt is huge, the deficit is rising at a time it should be lowering, etc.

    Calm before storm... And with this president who believes in bromides not facts, being saved in 2008 by Obama may now be a one off. "We have met the enemy and he is us."

  182. Obama inherited such a calamity in the great recession that he had to borrow a trillion a year for a couple of years just to right that ship. then borrowing went down, but now back up with Trump's gift to the rich. Truly a situation that cannot last. But I wonder if the average middle class voter can even add...

  183. The economy is good enough for some, but not good enough for many. When credit cards rates are in double digits, but banks pay less than 1% on deposits, the economy is good for some, but not good enough for many. When a college graduate pays as much on a college loan as rent, the economy is good for some, but not good enough for many. When retirees have almost nothing saved, the economy is good for some, but not good enough for many.

  184. Wait, didn't Trump relax the rules on payday lenders so the latter could resume preying on the masses? What are those middle class Republicans thinking? Do they like this policy?

  185. Well, we can't all be equal, that will be something called socialism

  186. I don't like to take issue with the hugely smart and experienced Fed staff, but I don't see the benefit to most Americans by raising rates.

    Looking at the charts on the steadily rising global corporate debt, the very high level of student and mortgage debt, and the high level of government debt gives me concern.

    I think the Fed should keep its eyes on the distribution of income and increasing concentration of wealth.

    I also think the Fed should look at incomes, cost of living, rents on the basis of household incomes by percentiles.

    If we are experiencing inflation, I can see raising interest rates but I don't really see that there is a lot of inflation except in health insurance costs, and the cost of healthcare.

    I note the NYTimes statement about not being able to find enough words to describe the health of the economy is one of the most frequently quoted by Republicans in the Congressional Record.

  187. If you don't raise rates, then the supercharging of the economy based on the borrowing and tax breaks would lead to inflation. The rate increases are modest, adjusted to just stay ahead of inflation which did slightly exceed the target 2% rate recently. Don't you fret. Rates will go back down when a recession comes after world trade comes to a halt, the middle class cannot buy anything because their jobs are replaced by machines, and the natural disasters (floods, hurricanes, tornadoes, wildfires) wreck our productivity.

  188. “…I don't see the benefit to most Americans by raising rates…”

    Supposedly raising short-term rates is a necessary evil that wards off an even worse evil: inflation.

    However, the problem is that the Fed is taking at face value the unemployment rate calculated by the BLS, without taking into account that 43% of the drop in the unemployment date is due to the shrinkage of the labor force. As a result, the drop in the unemployment rate is not likely to cause the traditional increase in demand and potential inflation.

    Source:
    Employment Situation Summary Table A. Household data, seasonally adjusted
    https://www.bls.gov/news.release/empsit.a.htm

  189. The Fed should have been raising rates more often during the Obama term - political considerations and a Wall Street based recovery always seemed to hold them back. It will be raised quickly during Trump's term in order to get it back to a place to allow it some impact when the economy slows down.

  190. @ Chris

    Actually it was the low rates during the Obama presidency that largely account for the fact we're in a historically long period of economic expansion. Trump inherited a strong and steadily growing economy (how different from January 2009). We'll see whether pushing up the Fed funds rate to around 3% over the next years has a dampening effect on growth. I suspect taken with rising gas prices (and inflation generally caused by tariff wars) and fairly flat wage growth that it probably will. The trillion dollar deficit (no the tax cuts are not going to pay for themselves) will also tend to push up borrowing costs.

  191. I know I'm looking into the US from overseas (and from the UK, to boot, with its own economic challenges at the moment); but I'm sure I'm missing something here in the context of the upcoming mid-terms:

    The Fed is increasing interest rates to pay-down the Quantitative Easing process since 2008, claiming a strong economy for being able to do this (albeit one that's running pretty hot in terms of full employment). Nevertheless borrowing costs will go up, and disposable incomes reduce.

    That's before the effect of the "tax cut", which is going to add significantly to the national deficit over the next 12-18 months or so, along with the borrowing costs (Treasury-bond issuance) to pay for it.

    ..Which will probably increase the value of the USD, making life harder for exporters (even those not already being disadvantaged by upcoming export-market end-pricing in the upcoming trade war).

    Importers' cost-bases, too, will be disadvantaged by incoming US-levied trade-war tariffs.

    The effects of both of these will be felt against relatively-stagnant wage rises (thus people's spending-power), and a Fed-predicted overall economy growth-rate of 2.7%: i.e. that rate will have to carry the aggregated downsides from the other causes.

    ..So what I'm missing in the context of the upcoming mid-terms is how the net effect of all this chicanery is going to be spun as Republican economic mastery (which some pundits are starting to flag-up as a real challenge to the Democrats' campaign)?

  192. The US Fed chairman's second interest rate hike at a quarter point though sustainable in the context of the satisfactory recovery of the economy, but such confidence might be misleading if seen against the other fundamentals of economy, like rising debt and deficit, corporate theft, decline in the formal sector employment, and the overall world economic dynamics.

  193. If this economy is in "great shape," then I hate to think what the next downturn is going to look like. Most of these new "jobs" are low-pay, no benefits, insecure, part-time gigs that can't support a family (look at the statistics). Consumer purchasing power is weak because of continued wage suppression and debt. Now we have sub-prime car loans! Need to sell those cars somehow. Most middle class people (what's left of them) don't believe this Fed chairman and his talk about a great economy. They've been experiencing a decline in their standard of living for decades. This is like listening to a Soviet politician talking about what a great success the last 5-year Plan was. Nobody believes him.

  194. The Federal Reserve as acting responsibly to quell an overly fired up economy and keep inflation in check. The problem for most Americans is that this fired up economy has not bettered their lot. Most of us are still not making a fair wage; still don't have adequate health care choices; still have no retirement plan, and still can't afford to sent our kids to college. With the additional burden of higher interest rates, soon we won't be able to afford that new car, or a home. All of the money Trump and our Republican Congress poured out into the hands of international corporations and the wealthy !% is not trickling down anywhere. The big guys (see A.T.&T. and Time-Warner) are busy getting big, big, bigger. Their executives and the investor class are all rolling in money. We are still left behind. Do you get it yet?

  195. "soon we won't be able to afford that new car, or a home"

    Many are already there, especially those with student loans. People who are militantly anti-tax need to see the results of not funding higher education: Maybe there's a good reason the houses in their neighborhood can't sell?

  196. Maybe the economy is great but at a $trillion a year in borrowing, it is truly not surprising. Yes I know, we wanted to cut the great burden to the rich. while still spending on everybody else to prevent a violent revolt of the population. But it just does not add up. What happens when the bills come due???