Fed Chair Jerome Powell says the US is on an unsustainable fiscal path and that it should be a “top-level issue.”
In a new discussion at the ECB Forum on Central Banking in Sintra, Portugal, Powell says that the US is running a “very large” deficit that needs to be addressed – ideally sooner rather than later.
While he won’t comment on any administration’s specific policies, Powell says the US needs to return to sustainable financial footing.
“I’m going to give you the traditional answer to some extent. That is that, we just don’t – fiscal policy is a job for elected people. We’re not elected people so we don’t comment on it, particularly in advance of a presidential election. We’re not commenting on anyone’s particular policies, one way or the other.
I will say more broadly though, that the United States is running a very large deficit at a time when we’re at full employment, and the level of debt is not unsustainable, [but] the path that we’re on is unsustainable.
That’s completely non-controversial.
I would’ve thought that this is something that should be a top-level issue, and you do hear this from a lot of elected officials but it should be a real focus going forward is, ‘how do we get back to a sustainable path?’, because you can’t run these kinds of deficits in good economic times for very long. I mean, I can’t really speak to the time, but in the long run, we’ll have to do something sooner or later, and sooner will be better than later.”
At time of publishing, the US government has a $1.2 trillion deficit and is $34.8 trillion in debt.
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