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"That's a risk that we monitor very carefully," Powell told the Joint Economic Committee on Thursday. "We don't see that yet."
Powell told lawmakers that because consumers are powering almost three-fourths of the country's gross domestic product at the moment, a slowdown in manufacturing is unlikely to pose a significant threat to the U.S. economy.
"That is what is driving our economy now," he said. "And it seems to be continuing to do so. But we monitor that very, very carefully."
In August, the U.S. manufacturing sector contracted for the first time in three years, raising concerns about the health of the economy. That grim trend continued in October, when the industry posted the biggest contraction in more than a decade. Although the metric improved slightly in October, it remains in contraction territory at 49.1.
Although manufacturing only accounts for about 11 percent of the U.S. economy, weak growth in the sector tends to precede recessions.
But Powell dismissed the possibility of a recession in the U.S., saying there's no reason the 11-year economic expansion can't continue.
"U.S. economy is the star economy these days," he said. "More than other advanced economies and [there's] no reason to think that can't continue."