PROVIDENCE, R.I. (Reuters) - Monetary policy is “well positioned” to support the strong labor market, which is just now starting to benefit workers on the margins, Federal Reserve Chair Jerome Powell said Monday.
Powell said he has heard stories of employers and schools collaborating to train and hire people with various levels of education and workers with disabilities, in remarks delivered at an annual dinner for the Greater Providence Chamber of Commerce.
“The benefits of the long expansion are only now reaching many communities, and there is plenty of room to build on the impressive gains achieved so far,” Powell said in his remarks.
Powell said adjustments to employment data suggested the labor market may not have been as strong last year as previously thought, a shift that supported the case for lower rates.
In September, the Bureau of Labor Statistics revised down its estimates for job creation. The agency said the economy added 170,000 jobs a month in the 12 months through March 2019, half a million fewer jobs than previously estimated.
“While this news did not dramatically alter our outlook, it pointed to an economy with somewhat less momentum than we had thought,” Powell said.
Low inflation data prompted Fed officials to lower their estimates for the neutral interest rate that would not stimulate the economy, Powell said. It also helped economists to realize that the natural rate of unemployment, at which the economy is running at full potential without causing inflation, is also lower than previously thought, Powell said.
The Fed chair said officials have a favorable outlook for the U.S. economy founded on strong consumer spending, which is bolstered by a robust job market, increasing incomes and solid consumer confidence.
Still, he said weak global growth and trade uncertainty are holding back growth and that policymakers will “respond accordingly” if economic data leads to a “material reassessment” of their economic outlook.
Fed officials cut interest rates in October for the third time this year, bringing their target rate to a range of 1.5% to 1.75%. Powell and other policymakers hinted after the reduction that rates were likely to stay put for the foreseeable future, barring a deterioration to the economic outlook.
“At this point in the long expansion, I see the glass as much more than half full,” Powell said. “With the right policies, we can fill it further, building on the gains so far and spreading the benefits more broadly to all Americans.”
Reporting by Jonnelle Marte; editing by Diane Craft and Cynthia Osterman