Transcriber: nvidia/parakeet-tdt-0.6b-v2, sat-12l-sm, and large-v3-turbo
Source
|
Time
Text
Ranking Member Smith, I urge my colleagues to support S3959, and I yield back the balance of my time.
Gentleman yields.
The question is: will the House suspend the rules and pass Senate 3959?
Those in favor say aye.
Those opposed, no.
In the opinion of the chair, two-thirds being in the affirmative.
The rules are suspended.
The bill is passed, and without objection, the motion to reconsider is laid on the table.
Pursuing to Clause 12A of Rule 1, the Chair declares the House in recess, subject to the call of the Chair.
The House has gaveled out for now.
Members have been working on a measure to help the Homeland Security Department in their effort to combat fentanyl, along with other legislation.
Later, we could see a three-month continuing resolution government funding bill come to the floor of the chamber.
The bill, which would extend funding until March 14th, includes money for disaster relief for the victims of hurricanes in the southeast.
Also, money to repair Baltimore's Francis Scott Key Bridge, which collapsed earlier this year.
The funding deadline to avoid a government shutdown is this coming Friday at midnight.
Live House coverage when members return here on C-SPAN.
I'll take you now to the remaining moments of a live press conference with Fed Chair Jerome Powell.
In a way that really raises concerns, I think, you know, you pointed out, participants in the FOMC really thought that the risks and uncertainty had improved relative to the labor market.
And it's because things have just gotten a little bit better.
It doesn't, you know, the unemployment rate flat and things like that.
Nonetheless, you know, we're watching it closely.
If the idea, though, is that no additional kind of softening in the labor market is welcome here, what's to prevent that from happening if rates are still restrictive?
So what I said is we don't think we need further softening to get to 2% inflation.
That's what I'm saying.
Not that it's not welcome.
We don't need it, we don't think.
If you had a situation where inflation is moving around by a tenth every few months, we'd have to weigh that against the fact that inflation has, in recent months, been moving sideways in the 12-month window.
And so we've got to weigh on both at this point.
For a while, though, we were only really focused, mainly focused on inflation.
We've now gotten to a place where the risks of the two are what we think are broadly, roughly in balance.
And so that's how we think about it.
Steve.
Mr. Chairman, I did not hear you use the word recalibration today.
And I'm just wondering if the recalibration phase is over and what you might call this new phase and whether the criteria for changing rates is somehow different and higher than it was before.
Thanks.
We're not renaming the phase yet, but we may get around to that.
But no, I would say we are, though, in a new phase in the process, as I said.
And that's just because we've reduced our policy rate by 100 basis points.
We're significantly closer to neutral.
We still think where we are is meaningfully restrictive.
And I think from this point forward, you know, it's appropriate to move cautiously and look for progress on inflation.
We've done a lot to support economic activity by cutting 100 basis points.
And that's a good thing.
I think I support the decision, and I think it was the right decision to make.
I think from now, we are in a place where the risks really are in balance, and we need to see progress on inflation.
And that's how we're thinking about it.
So it is kind of a new thing.
We move pretty quickly to get to here.
And I think going forward, obviously, we're going to be moving slower, which is consistent with the SEP.
I wonder if I could follow up and ask you how much you or the committee are looking through some of the high numbers we've had in the recent inflation numbers.
For example, cars being up maybe because of the hurricanes, eggs because of the avian flu, that kind of stuff, and then looking forward perhaps to housing inflation coming down as it did in the recent report.
So we always try to be careful about not throwing out the numbers we don't like.
It's just an occupational hazard to look, oh, those high months are wrong.
What about the low months?
We have a very low month potentially in November.
It's estimated by many to be in the mid-teens for core PCE.
So that could be idiosyncratically low.
We try to look at not just a couple or three months.
Our position shouldn't change based on two or three months of good or bad data.
We have a long string now of inflation coming down gradually over time.
As I mentioned, 12-month, I think 12-month headlines, 2.5%, 12-month core is 2.8.
That's way better than we were.
We still have some work to do, though, is how we're looking at it.
And we need policy to remain restrictive to get that work done, we think.
Neil.
Thanks, Chair.
Chair Powell, Neil Irwin from Axios.
Financial markets have been very buoyant really all year.
Is the committee comfortable with where financial conditions are, or do you see a risk that looseness in financial conditions could undermine progress on your inflation target?
So we do look carefully at financial conditions.
Of course, that's part of what we do.
But we really look carefully at the performance of our goal variables and how are we affecting the economy.
So what we've seen over the course of, just take the last year, we've seen inflation, well, over the last couple of years, come down a lot.
We've seen the labor market cool off quite a bit.
That suggests that our policy is restrictive.
We can also look more directly at the parts of the economy that are affected by that are interest sensitive, like particularly housing.
Housing activity is very low, and that's partly significantly because of our policy.
So we think our policy is working, it's transmitting, and it's having the effects on our goal variables that we would want.
You know, a lot of things move financial conditions around, as you know, and we don't really control those.
But I'd say we see the effects we're hoping to see on the goal variables and the places where we'd expect to see it.
So if I may, speaking of assets that have been buoyant, do you see any value or benefits in the U.S. government building a reserve of Bitcoin?
So, you know, we're not allowed to own Bitcoin.
The Federal Reserve Act says what we can own, and we're not looking for a law change.
That's the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.
Andrew.
Happy holidays, Mr. Chairman.
Thanks for taking our questions.
I was wondering if you are satisfied with the way 2024 is ending.
If you're confident that we've avoided the recession that forecasters were predicting as inevitable a couple years ago.
I think it's pretty clear we've avoided a recession.
I think growth this year has been solid.
It really has.
PDFP, private domestic final purchases, which we think is the best indicator of private demand, is looking to come in around 3% this year.
This is a really good number.
Again, the U.S. economy has just been remarkable.
And in these international meetings that I attend, this has been the story, how well the U.S. is doing.
If you look around the world, there's just a lot of slow growth and continued struggle with inflation.
So I feel very good about where the economy is and the performance of the economy, and we want to keep that going.
The other thing I just wanted to ask about was the you guys have noted that the unemployment rate is still low.
However, employment rates have fallen rather quickly.
The prime age employment rate has fell by about half a point, half a percent rather recently.
The question, I guess, is: do you think there's maybe more downside momentum in the labor market than the unemployment rate alone is signaling?
I don't think so.
No, I think overall, if you look at it, prime age participation is still very high.
What's going on in the labor market is that the hiring rate is low.
So, if you have a job, you're doing very well, and layoffs are very low, right?
So, people are not losing their jobs in large numbers, unusually large numbers.
If you are looking for a job, though, the hiring rate is low, and that's a signal of lower demand.
It has come down.
So, we look for signs like that, and that's clearly a sign of softening, further softening.
I didn't mention it earlier, but I think you can see an ongoing gradual softening in the labor market.
Again, not something we need to see to get 2% inflation, and that's part of the reason that explains why we moved ahead today with the action with an additional cut.
But you take a step back, the level of unemployment is very low.
Again, participation is high.
Wages are at a healthy and ever more sustainable level, wage growth.
And so, the labor market, this is a good labor market, and we want to keep it that way.
Amira.
Thank you, Amira Mokwe from Bloomberg News.
I just want to put a finer point on the labor market.
Can you keep the labor market this way in the strong position that you have described without further cuts?
In other words, do you still view the labor market as needing support to protect against the further cool-in?
You know, we can't know that with any tremendous certainty.
I will say that we think that our policy balances the risks.
We think the risks are roughly in balance as between the two mandates, and we think the labor market is in solid shape.
And when I say it's softening or cooling, it's a very gradual process.
You know, job creations are meaningfully positive.
Wages are, you know, if anything, a little still a bit above what would be sustainable if productivity were to revert to its longer-run trend.
If you take into account the high productivity readings we've had, then wages are already at a sustainable level relative to 2% inflation.
So, again, I don't want to overstate the downside in the labor market because the downsides clearly appear to have diminished.
Nonetheless, it's one of our mandate goals, and we pay close attention to it.
And it's worth noting that it is still gradually cooling, gradually, and in an orderly way.
And that's how I would characterize it, and that's why we're paying careful attention.
Elizabeth.
Thanks so much, Chair Powell.
Elizabeth Schulze from ABC News.
As you've noted, the Fed is now forecasting higher inflation next year.
High prices are still a burden for so many households right now.
Why do you think it is that inflation is proving to be more stubborn than you'd expected?
You know, it breaks down into a long answer, if you want, but it just has been a little bit more stubborn.
I think if you go back two or three years, many people were saying that to get this far down, we would have had to have a deep recession and high unemployment by now.
Well, that has not been the case.
So, you know, the path down has actually been much better than many predicted.
We've managed to have the unemployment rate remain essentially at its longer-run natural rate while inflation has come down from, you know, core piece of inflation has come down from 5.6% to 2.8% on a 12-month basis.
So that's a pretty good outcome.
Why hasn't it come down?
One reason is that just a technical issue around the way we calculate housing services.
And that process has been slower than market rents are showing up more slowly in that measure than we might have thought two years ago.
So that's part of it.
I think there are other parts of the story.
But what I think people are feeling right now is the effect of high prices, not high inflation.
So we understand very well that prices went up by a great deal, and people really feel that.
And it's prices of food and transportation and heating your home and things like that.
So there's tremendous pain in that burst of inflation that was very global.
This was everywhere in all the advanced economies at the same time.
So now we have inflation itself is way down, but people are still feeling high prices.
And that is really what people are feeling.
The best we can do for them, and that's who we work for, is to get inflation back down to its target and keep it there so that people are earning big, real wage increases so that their wages are going up, their compensation is going up faster than inflation year upon year upon year.
And that's what will restore people's good feeling about the economy.
That's what it will take, and that's what we're aiming for.
And as we look ahead to next year, what do you see as the biggest challenge to the economy under the next administration?
I feel very good about where the economy is.
Honestly, I'm very optimistic about the economy.
And we're in a really good place.
Our policy is in a really good place.
I expect another good year next year.
Edward.
Thanks, Chair Powell, for doing the questions.
Edward Lawrence from Fox Business.
So you say that we're closer to the neutral rate.
What percent do you see in the committee believes where is that neutral rate?
So I'll say a couple things.
First of all, when we write, the thing we write down in the summary of economic projections is the longer run neutral rate, which is the neutral rate at a time when supply and demand are in balance, the full economy is in balance, and no shocks are hitting the economy.
That is not where we are right now.
So when we're making monetary policy at the Fed, that's not the question we're asking.
So you can't do a straight read between those longer run numbers that we write down and what we think the appropriate policy should be.
So basically, at any given time, various shocks are hitting the economy.
And so what we're doing in real time is we're looking at our policy stance and we're looking at the way it's hitting the economy.
And particularly, we look at the effects it's having as we try to move the economy toward maximum employment and price stability.
And the answer can be there are things that affect the economy that are lasting but not permanent.
And the ones that are permanent are the ones that would be in our star.
The ones that could be lasting but nonetheless go away over time, they could actually affect what's sort of technically the appropriate neutral stance in near term.
So we're looking at that and we don't know exactly where it is, but as I like to say, we know it by its works.
And I think what we know for sure is that we're 100 basis points closer to it right now.
There are many estimates of where that might be, and we know we're a lot closer to it.
And I think we're in a good place, but I think from here, it's a new phase, and we're going to be cautious about further cuts.
But I think the markets are looking for a little more clarity.
I mean, I've heard estimates from 2.9% to 4%.
I think the markets would like to see a little more clarity about a year out, 18 months out, as to where that goalpost, for lack of a better term, is because at the moment it looks big.
Yeah, I mean, honestly, there are countless models of what a neutral rate might be at any given time.
There are empirical models, there are theoretical models, there are things that combine them, and they have as many different answers as you'd like.
So there is no real certainty.
And I mean, it's actually a good thing to know that we don't know exactly where it is.
So you're not tempted to think, oh, I think this model or this estimate is right.
You just have to be open to the empirical data that are coming in and also how it's affecting the outlook.
And it's not made any easier by the fact that our policy works with long and variable legs.
Nonetheless, that is the job we have.
And so I think we need it's appropriate for us now to proceed cautiously now that we're 100 basis points closer to neutral.
And we'll do so.
Meanwhile, the economy seems to be in good shape, and these cuts will certainly help to support economic activity and the labor market while we can still make progress on inflation because policy is still meaningfully restrictive.
Victoria.
Hi, Victoria Guido with Politico.
I just wanted to make sure I understood what you were saying at the beginning about inflation.
Are you saying that progress on core PCE counts as progress on inflation, even if headline inflation ticks up?
And then also, since that's what's projected in the SEP, I was wondering what accounts for that?
Why do you all see core PCE going down and potentially headline inflation ticking up?
So, and as I imagine you know, the goal overall is headline inflation because that's what people experience.
People don't experience core inflation, they experience inflation, and that includes food and energy costs.
So, that's the overall goal.
But, as we know, headline inflation contains energy and food, and those prices can fluctuate for reasons that are not related to tightness in the economy and therefore are not really good predictors of future inflation.
So, it turns out that core inflation is a better predictor of overall inflation than overall inflation is.
So, we look at core inflation because it's a better measure of what future inflation is likely to be, because it's a better measure of what inflation pressures exist.
So, it's complicated, but ultimately, our goal is headline, not core.
So, your question was, your second question was what?
Why do you all see core going down but headline potentially ticking up?
So, headline can be affected, you're talking about next year.
Yeah, so headline can, again, it can be affected by energy prices and food prices.
So, there will be things in the headline forecast that are to do with forecasts of energy prices, whereas core will be, if you look at core going out a full year, then it'll be much more driven by things like tightness in the economy.
So, that's why the two can go in different directions.
Headline has been lower, as you know, most of this year, but that's because energy prices have been coming down, which is a great thing for people, but energy prices will come down and they will go up, and it won't really be telling us anything about how tight the economy is and how future inflation will perform.
Do geopolitical risks factor in at all to how you're thinking about energy?
So, we monitor geopolitical risks really quickly, but you know, really carefully, rather.
But, you know, I would say so far those risks haven't really nothing has come out of those risks that has really been important for the United States economy.
Single thing that you would look to is the price of oil, given that we're talking about the Middle East and Ukraine.
But that is a good summary statistic for the kind of thing that could go wrong with global turmoil.
But the price of oil has been coming down because of supply conditions, global supply conditions.
So the U.S. is not feeling really the effects of geopolitical turmoil, but we are certainly at a time of elevated geopolitical turmoil, and it remains a risk.
Kelly.
Thanks, Chair Powell.
Kelly O'Gready from CBS News.
I want to go back to something that you said a minute ago: that wage growth is outpacing inflation now.
It wasn't the case for some time, of course.
It's partly why Americans haven't felt much relief in their wallets from prices yet.
But with inflation ticking up, how worried are you the progress in closing that gap could go away?
Yeah, so inflation, again, we don't overreact to a couple of months of higher readings or a couple months of lower readings.
And what we had was September, we had four months of really nice readings, and then September and October were higher, but then November is much lower.
So I don't really think the public is experiencing that as a surprising upside risk to inflation.
I think inflation is much lower.
What the public is feeling, and they're right about it, is that prices are just, the price level went up because of the past inflation.
And it's going to take some time for real wages to recover over a period of years in which your real compensation is growing.
In other words, your compensation is growing meaningfully faster than inflation.
That's exactly the kind of economy we have now.
And we just want to hold on to it.
That process will probably take some years, but that's what's going on right now.
And I don't think that a couple of months of higher inflation really signal that anything of the nature you're suggesting.
And just one follow-up.
Let's look more long-term.
You previously predicted hitting the 2% inflation target in 2026.
It's now been pushed out to 2027.
You said you're focused on enabling further progress on inflation.
That's not necessarily progress in the right direction.
Are you confident that target isn't going to move further out?
We're talking about when you're projecting the economy, you know, three years out, two years out, you're talking about high uncertainty, very high uncertainty.
You know, we really, at that point, that's not possible to confidently predict where the economy is going to be in three years.
So what we're doing is we're looking at what's happening now.
We're kind of projecting that the same kinds of things are happening.
So we keep a strong labor market, housing services inflation comes down, goods and services, goods inflation settles down, and non-market services return to their prior level.
All of those things should happen over time.
And those pieces come together.
There's every reason to think that they will.
The timing of it is highly uncertain.
But you're not wrong, though, that it's been a bit frustrating because while we've made progress, it has been slower than we had hoped.
Nonetheless, we're still on track.
And I think if two years ago you'd said we were at 4.2% unemployment and 2.8% inflation, people would say, I'll take that.
I mean, that's a pretty good interim place to be.
Job's not done, but I think we're feeling good about where we are and where we're headed.
Go to Nancy for the last question.
Hi, Chair Powell, Nancy Marshall-Genser from Marketplace.
Like you said a couple times, inflation has been moving sideways, appears to be settling in around 2.5%.
Do you think the Fed is just going to have to settle for that and accept that you're not going to get to your 2 percent target?
No, we're not going to settle for that.
I think we certainly have every intention and expectations that we'll get inflation back sustainably to 2 percent.
And I am confident we will achieve that.
It has taken longer, but you have to be, you know, we are making progress.
We have made a great deal of progress and we'll continue to do so and get back to 2 percent inflation.
That's what we owe the public, and you know, we're committed to achieving it.
In that case, can you rule out a rate hike next year?
You don't rule things completely in or out in this world.
That doesn't appear to be a likely outcome.
I think we're at 4.3 percent.
That's meaningfully restrictive, and I think it's a well-calibrated rate for us to continue to make progress on inflation while keeping a strong labor market.
So, thank you very much.
and to you.
The U.S. House is currently in recess, subject to the call of the chair.
Members could see more votes this evening as they await notice on whether a three-month stopgap government funding bill comes to the floor.