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"I wouldn't see the recession as the most likely outcome in the U.S.," he said during a question-and-answer session in Zurich, Switzerland on Friday.
Powell said that data shows the U.S. economy will continue to expand at a moderate pace, with a strong labor market and inflation hovering around the Fed's 2 percent target.
However, he acknowledged there are competing threats to the economic picture, including persistently low inflation and the trade war, which he said is weighing on business investment and confidence. Economists recently estimated the latest round of tariffs imposed on Chinese goods by the Trump administration could cost the average American household an additional $460 per year.
“The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up," Powell said.
Still, the Fed, and Powell, have become a favorite punching bag of President Trump, who has said that rates are too high and hurting the ability of the U.S. to compete globally.
But Powell said that lower interest rates have helped to keep the U.S. economy in a good place. Policymakers at the Federal Open Market Committee lowered the interbank lending rate by 25 basis points in July for the first time since the financial crisis. At the time, they cited "global developments in the economic outlook as well as muted inflation pressures."
Since July, however, the economic outlook has continued to darken: A frequently watched recession indicator flashed red in August when two-year Treasury yields rose above 10-year yields; manufacturing contracted in the U.S. and the European Union; job growth slowed in the U.S. last month; and heightened trade tensions continued to weigh on the stock markets.
Fed officials are widely expected to lower the benchmark federal funds rate by another quarter-point during their meeting later this month.
"We're going to act as appropriate to sustain the expansion," Powell said. "I don't have anything other than that to say here tonight."