Former Federal Reserve Chairman Ben Bernanke is bullish on the U.S. economy and bullish on the consumer sector.
GDP growth averaged 4.8 percent in the second and third quarters. That puts the economy in its strongest position since the Great Recession of 2007-09, Bernanke said at the annual meeting of the National Retail Federation,
The (New Jersey) Record reported.
"There is a lot of domestic momentum going on," he said. As for the consumer sector, the financial health of Americans is "the best looking it's been since 2006-2007," Bernanke said.
Real personal consumption expenditures rose 3.2 percent annualized in the third quarter, compared with an increase of 2.5 percent in the second.
The retail sector has nothing to fear from impending interest rate increases by the Fed, Bernanke said. Indeed, "when the interest rate starts to rise, that's going to be good news," he maintained. "It means the economy is strong enough to sustain it."
Many economists believe the Fed will begin raising rates around mid-year.
Meanwhile, Bernanke explained the economy would have strengthened sooner if Congress hadn't focused so much on austerity over the past few years. "It was not the time for austerity," he said.
Retailers aren't the only ones who don't have to worry about Fed rate hikes, says
David Blitzer, chairman of the Index Committee for S&P Dow Jones Indices.
Many financial market participants are concerned that rate increases will make stocks and bonds plunge while the dollar soars, wreaking great havoc on the economy and investors.
Not so fast, Blitzer noted. "A glance at the last two times the Fed shifted from easing to raising rates suggests that these fears are misplaced," he wrote on the firm's website.
"The last two Fed tightening moves began in February 1994 and in June 2004. Both were taken in stride in the economy, the stock market and the foreign exchange markets."