It’s a pleasure to join you this morning for your Annual conference on forecasts and strategies. I look forward to a wide-ranging discussion of issues confronting the US, China, and the global economy.
In terms of some key macroeconomic objectives, the United States is performing exceptionally well. At 3.7%, the U.S. unemployment rate has fallen to a 50-year low, even below levels that most participants in the Fed’s Open Market Committee judge to be consistent with “full employment.” Even after nine years of expansion, job gains still average around 200,000 per month. Inflation fell short of the Fed’s 2% objective for almost six years, but it’s moved up and now looks to have settled near the Fed’s 2% target. Strong US growth is a support to the global economy.
Beginning in 2015, with growing strength in the U.S. economy, the Federal Reserve embarked on the process of “normalizing” monetary policy. As Chair, my most important task was to get that process going in a manner that was gradual, well-communicated and calibrated to permit continuing progress toward our macroeconomic goals. We also sought to avoid unnecessary negative spillovers to our neighbors—spillovers of the type that occurred in 2013 due to the “taper tantrum.” In December 2015, we raised our target for the federal funds rate for the first time in seven years and in October of 2017, we began the process of shrinking the Fed’s $4.5 trillion balance sheet by redeeming some of the principal repayments on the securities in the Fed’s portfolio. Normalization of both short rates and the balance sheet are proceeding smoothly and, with the economy performing so well, Chair Powell and the FOMC are continuing the process of removing monetary accommodation to return the federal funds rate to a “neutral” stance. I expect that to continue over the next year unless there are significant economic surprises.
One risk pertains to the chance of a recession in the next few years. Expansions don’t usually die of old age; typically, there’s a reason. Sometimes it’s due to imbalances that are driving an unsustainable boom. Most often the reason is that the Fed causes the recession by tightening policy to bring inflation down.
I don’t see the US economy at this point as suffering from serious imbalances. Household debt has declined considerably and credit growth has been moderate. The banking system is far better capitalized and more liquid than before the crisis; leverage in the financial sector is well below precrisis levels. I am concerned by the high level of nonfinancial corporate debt, which could be vulnerable in a slowing economy with rising interest rates; but the debt looks largely to be held by unlevered investors. Asset prices are elevated relative to historic valuation norms but reasonably normal relative to the low levels of long-term yields. There are of course risks that those rates could rise but many economists believe that slow productivity growth, aging populations and a strong demand for safe assets will depress real interest rates in the U.S. and other developed economies for a long time to come.
There is a risk that the Fed will cause the next recession, but with skill and luck I believe it’s something the Fed has a good chance to avoid. That said, the Fed faces a very tricky task. As I mentioned, job gains are continuing at around 200,000 a month, a pace well above the level consistent with a stable unemployment rate. Moreover, unemployment has already declined below levels judged to be sustainable over the longer run and the current pace of growth of around 3% far exceeds the growth rate of potential output. This partly reflects the highly stimulatory fiscal policy that is now in place. To complicate matters, that stimulus may well phase out at exactly the time that monetary policy begins to bite—in 2020 or 2021. Over the next year, I anticipate that the Fed will boost rates 3 or 4 additional times to stabilize the unemployment rate. Policy is not on a preset course though and the actual pace of Fed tightening will depend on how inflation and the labor market evolve relative to current expectations. Accomplishing such a “soft landing” is an exceptionally difficult task made more difficult by the current fiscal policy trajectory. But the odds of success are boosted by fact that inflation remains low; there are few if any signs of building inflation pressures; inflation expectations are well anchored; and the linkages between labor market slack and inflation look to be weak.
还有一个风险在于，美联储将引发新一轮经济衰退，但是通过良好的运作，再加上一点运气，我认为美联储很有可能能够避免此类事情的发生。尽管如此，美联储面临着一个十分棘手的任务。正如我刚才所提到的，工作岗位继续保持着约20万个/月的增幅，大幅超过了稳定失业率状态下所应具有的水平。此外，失业率已低于外界所认定的长期可持续水平，而且当前约3%的增幅大大超过了潜在产出的增速。这一现象部分归功于如今已实施的强刺激性财政政策。同时，这轮刺激所带来的影响可能会在货币政策刚刚发挥作用时（2020或2021年）基本上已经消失，因此届时形势会变得更加复杂。明年，我预计美联储为了稳住失业率将再次加息3到4次。不过，政策并不是预先设定好的，美联储紧缩政策的实际步伐取决于通胀和劳动力市场是否会按照当前预期的发展。完成这类软着陆是一件异常困难的任务，而当前财政政策轨迹则增加了这一任务的难度。下列因素有助于这一举措获得成功：通胀依然维持在较低水平；通胀压力上升的迹象不明显或不存在；通胀预期得到有效调控；而且劳动力市场疲软和通胀之间的关联并不是很强。 Some further risks pertain to the possible global spillovers and spillbacks from the Fed’s monetary policy and also from U.S. trade policy. I look forward to discussing these global linkages and risks in our conversation this morning.