Fed’s Chair Jerome Powell tends to exaggerate the US economic strength. Nevertheless, the US economy could face a challenge soon. In his public remarks, the Fed’s leader used to compare the national economy with the glass which is more than half full. He had an excuse for such an elevated tone. Even a downturn in the US manufacturing sector and the fallout from the trade war could not overshadow the solid economic growth. By the year end, jitters have escalated worldwide. The trade conflict between the US and China has reached the flashpoint. The Tories’ victory in the parliamentary election opened the door to Brexit at any cost. Leading central banks have held final policy meetings in the outgoing year. In this context, Jerome Powell acknowledged the fact that the US economy was sensitive to global jolts. He pledged that the central bank was ready to act as appropriate. At present, the regulator does not have to resort to drastic measures. Donald Trump decided not to impose tariffs on imports from China as scheduled. Moreover, the President announced that the first phase trade deal was likely to be settled in early January. Such developments do not mean the end of the trade war. However, the news boosted investors’ confidence. Meanwhile, investors prefer cautiously optimistic sentiment. "Our broad view is that the global economy has a lower speed limit that is setting in," James McCann, Senior Global Economist at Aberdeen Standard Investments said. “This may constrain the United States even if the trade war eases. Even in emerging markets the speed limit is slowing, with China and other large developing countries no longer the dependable props for global demand they were at the end of the 2007 to 2009 economic crisis."
