Federal Reserve Chair Jerome H. Powell, one of the nation's top policymakers, predicted the economy is not going to be deep down this year.
"I do not see a recession" in 2019, Powell said Thursday in an interview at the Economic Club of Washington, D.C. "The U.S. economy is solid. It has good momentum coming into this year. "
Lawrence Summers, a Harvard University professor and former treasury secretary under President Bill Clinton, said this week he thinks there's "better than a 50/50 chance" of at recession in 2020.
Powell stressed that the Fed is "watching" the situation closely and monitoring potential cracks in the economy. His biggest concern is weakening growth in China and Europe, although he warned that a prolonged U.S. government shutdown could become a drag on the economy.
"The principal worry I would have is really global growth," Powell said, but he added: "I still think the most likely baseline case for China is another year of solid growth."
The Fed Chair, who has been publicly criticized repeatedly by President Trump in recent months, warned that if there is an "extended shutdown," it would have an impact on the economy. "
JPMorgan Chase has estimated the partial government shutdown – which is 20 days old Thursday – is shaving $ 1.5 billion off the economy each week, but the damages will keep growing.
While there is wide agreement that the U.S. economy will grow more slowly than the roughly 3 percent rate of 2018, there's a lot of debate about how fast and steep the slowdown will be. The Fed is projecting 2.3 percent growth this year, but the precipitous stock market drop in December
Recessions are typically triggered by inflation rising quickly and forcing the Fed to respond with high interest rates, or by some sort of bubble in markets. "We do not see those risks," the Fed leader said.
It is a problem that the Commerce Department is mostly shuttered, which means that it will not be released later this month unless the government reopens. That makes it harder for the Fed – and investors and government officials – to understand how the economy is doing.
Trump has urged the Fed not to raise interest rates at all this year. The Fed has now been signaling that the Fed will be "patient" on any further hikes.
Asked Thursday, Powell said, "You should anticipate we're going to be patient and watching," which was widely interpreted as a "no."
Wall Street traders see at 99.5 percent chance the Fed will not increase at the end of January, according to CME Group.
Many business leaders remain optimistic about the U.S. economy this year despite higher interest rates and large swings in the stock market. The U.S. Chamber of Commerce, which represents millions of businesses, low unemployment projects, modest inflation and 2.6 percent growth for 2019.
"There are some who are determined to talk into a downturn," Thomas J. Donohue, president of the U.S. Chamber, said in a speech Thursday. "But do not match up with reality."