September 20, 2023 Chair Powell’s Press Conference FINAL
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you think the economy works, a change in the mix of supply healing versus demand destruction
that’s necessary to achieve this?
CHAIR POWELL. Yes, of course. It is a—it is a good thing that we, we’ve seen now
meaningful rebalancing in the labor market without an increase in unemployment, and that’s,
that’s because we’re seeing that rebalancing in other places—in, for example, job openings and
in the jobs–worker gap. You’re also seeing supply-side things—so, so that’s happening. I would
say, though, we still—I still think, and I think, broadly, people still think, that there will have to
be some softening in the labor market that can come through more supply, as we’ve seen as well.
Also, remember, the natural rate, we think, is, is coming down, which is a supply-side thing, so
that the, the gap between any given unemployment rate that’s lower than that and the natural rate
comes down. That’s a way for supply—that’s a way for the labor market to achieve a better
balance. So all of those things are happening. You’re right—in, in the median forecast, we
don’t see a big increase in unemployment. We do see an increase, and—but that’s—that really is
just “playing forward” the trends that we’ve been seeing. That is not guaranteed. There, there
may come a time when unemployment goes up more than that, but that’s, that’s really what
we’ve been seeing is, progress without higher unemployment for now.
HOWARD SCHNEIDER. So just to, to boil that down for a second—you know, we’ve
gone from a very narrow path to a—to a soft landing to something different. Would you call the
soft landing now a baseline expectation?
CHAIR POWELL. No, no—I would not do that. I, I would just say—what, what would
I say about that? I’ve always thought that the soft landing was, was a plausible outcome—that
there was a path, really, to, to a soft landing. I’ve thought that, and I’ve said that since we lifted
off. It’s also possible that, that the path has narrowed, and it’s widened, apparently. Ultimately,