The total national debt for the U.S. has hit $21.9 trillion and to Federal Reserve Chairman Jerome Powell, his concern is growing along with the debt.
“I’m very worried about it,” said Powell said as he addressed The Economic Club of Washington, D.C. in a panel talk on Thursday. “From the Fed’s standpoint, we’re really looking at a business cycle length: that’s our frame of reference. The long-run fiscal, non-sustainability of the U.S. federal government isn’t really something that plays into the medium-term that is relevant for our policy decisions.”
Additionally, the annual deficit has reached $1 trillion, which could spell trouble for the country if a recession were to hit. Powell’s comments regarding the debt come as fears of a global economic slowdown are causing investors to fret despite strong economic data, such as a robust labor market.
“It’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face,” Powell said.
Related: Fed’s Powell Issues ‘Flexible’ Stance on Interest Rate Hikes Amid Strong Jobs Report
Patience is Key
The Federal Reserve didn’t show much dynamism in 2018 with respect to monetary policy, obstinately sticking with a rate-hiking measure with four increases in the federal funds rate. That appears to have changed given the current economic landscape, and especially in the capital markets as Fed Chair Jerome Powell is now preaching patience and adaptability.
“As always, there is no preset path for policy,” Powell said. “And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.”
Powell’s latest comments came after U.S. equities finished their worst year in over a decade. The Dow fell 5.6 percent, while the S&P 500 lost 6.2 percent and the Nasdaq Composite fell 4 percent.
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