U.S. Federal Reserve Chair Jerome Powell is warning that the government cannot continue on its path of relentless debt accumulation.
In a new 60 Minutes interview with Scott Pelley, Powell says the ballooning national debt is becoming a danger to the stability of the US economy.
The Fed Chair calls the attention of the US federal government, saying that the next generation will likely pay the price unless the country finds a way to grow the economy while reducing its debt burden.
“In the long run, the US is on an unsustainable fiscal path. The US federal government is on an unsustainable fiscal path and that just means that the debt is growing faster than the economy…
Over the long run, of course, it does [worry me]. Effectively, we’re borrowing from future generations. It’s time for us to get back to putting a priority on fiscal sustainability and sooner is better than later.”
According to the Treasury Department, the national debt now stands at a record-high of $34.147 trillion, accounting for about 123% of the country’s GDP.
But for now, Powell says the US economy is in a solid position to witness growth with inflation trending down to the Fed’s target of 2%. According to Powell, the Federal Reserve just needs more data to confirm that the time is right to loosen monetary policies.
“We have a strong economy. Growth is going on at a solid pace. The labor market is strong, 3.7% unemployment.
With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully. We want to see more evidence that inflation is moving sustainably down to 2%. We have some confidence in that. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”