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In the most recent (Mar. 20, 2019) FOMC Press conference, Powell said this:

So, global economy was a tailwind for the United States in 2017. That was the year of synchronized global growth, and we began 2018 expecting and hoping for more of the same. What happened instead is that the global economy started to gradually slow, and now we see a situation where the European economy has slowed substantially and so has the Chinese economy, although the European economy more. And just as strong global growth was a tailwind, weaker global growth can be a headwind to our economy.

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His logic makes sense, and yes this is a world of interconnected financial markets, but I still wonder is Powell's assertion axiomatic here with the larger community of economists?

Just merely playing devil's advocate, I would suspect that because of the Eurozone troubles in recent years, this helped the dollar stay stronger than it would have otherwise, citaris paribus. Not to say that currency valuation is everything, but is there really no counter argument for Powell's stance?

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  • $\begingroup$ An autarky would be completely immune to the effects of another economy. Conversely if all Americans started shorting the Euro... you get the idea, I hope. $\endgroup$ – Fizz Mar 25 at 6:32
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Randomly, I came across a compelling counter-argument just today which I will share below. I'm not sure I buy into this theory whole-heartedly, but there are some valid points and it's worth reading through, even just for the sake of generating more discussion:

America benefits when everybody is worried about problems abroad, and as a result of that they buy dollars. What does that do for America? Well, a stronger dollar keeps a lid on consumer prices for Americans and it keeps a lid on interest rates for Americans. Also if people are buying into dollars and dollar denominated assets, it helps sustain asset prices. That's a double win; the worse things get abroad the better things get in the United States. But it works the same way in reverse. When people have a more optimistic outlook on global growth, then they don't need the dollar as a safe haven. And now the dollar starts to fall. That means we now have upward pressure on consumer prices. That puts upward pressure on US interest rates. And that puts downward pressure on US assets, because there is no longer demand for US treasury bonds, for US stocks, for US real estate, because now people want to invest internationally. That's where the money will go because that's where investors will find growth, and that will in turn hurt the US economy. -- Peter Schiff

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And just as strong global growth was a tailwind, weaker global growth can be a headwind to our economy.

Powell does make some good points.
Since the United States is not an autarky, we benefit from the increased trade when the global economy is doing well; conversely, the country's economy suffers when there is less international activity in our markets.

But...

Powell's assertion is by no means axiomatic.
Take, for example, the current global economic situation. As Powell asserts,

the global economy started to gradually slow, and now we see a situation where the European economy has slowed substantially and so has the Chinese economy...

(with some financial mangers asserting that Europe and China are already in a recession).
Yet, the United States is seeing the largest bull market in history with the bull market expected to continue despite the uncertainty.

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