Powell warns of tariffs risks to jobs and comments on lofty stock market

If you’re looking for bold statements, Jerome Powell is not your man. But if you want steadiness — responses rooted in data, delivered with civility, dry humor, and the occasional dad joke — the Fed chair delivered just that at the Greater Providence Chamber of Commerce on Tuesday.

Powell cast the U.S. economy as resilient in the face of “substantial change,” but noted that the pace of growth has moderated. Consumer spending has slowed, and the labor market has cooled sharply. Payroll gains fell below the break-even rate over the summer, he said, with “downside risks to employment” now more evident. Companies, citing policy uncertainty, are holding back on hiring, capital spending, and expansion plans.

“Businesses say uncertainty [about federal economic policy] is weighing on their outlook,” Powell noted, citing the Fed’s most recent Beige Book , which brings together qualitative data from regional Fed banks around the country. The effect was observable across all regions, he said.

Tariffs also loomed large in his remarks. Higher import duties are raising prices, though Powell described the effect as more like a one-time increase spread over several quarters rather than a permanent acceleration. He was, however, rather more explicit than usual about tariffs feeding into the job market, noting that companies not hiring is “a way of passing on tariff costs.” For now, retailers and importers are bearing most of the burden, but Powell implied consumers may feel more of the pressure heading into next year.

Asked about the “frothy” stock market, Powell acknowledged that equity valuations appear stretched, and that markets have already priced in the rate path over the next six months . “Some prices are elevated relative to historical levels,” he said, with AI stocks doing much of the heavy lifting.

Still, he resisted sweeping claims about AI, calling it “especially interesting” but too early to judge as the most disruptive force in modern history. He struck his usual optimistic note in the face of technological change, saying that American history largely points to innovation helping to decrease inequality.

Throughout, Powell stressed the Fed’s focus on maximum employment and price stability. “There’s no risk-free path,” he said. “We’ll manage our way through it… We’re never, ever thinking of political things.”

Though they frequently hear such criticism, calling the Fed political is a “cheap shot,” he said. “Our [counter] argument is doing our jobs.”