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Speech
2025 Economic Outlook
A strong but choosier consumer, coupled with a better-valued, more productive workforce has landed the economy in a good place.My baseline outlook is good. How economic policy uncertainty resolves will matter. But, with what we know today, I expect more upside than downside in terms of growth. I see more risk on the inflation side.The Fed remains well-positioned regardless of how the economy develops. Were employment to falter or inflation to re-emerge, we have the tools to respond.
Speech
How Did the Economy Get Here?
A strong but choosier consumer, coupled with a more productive and better valued workforce has landed the economy in a good place.As a consequence, the FOMC has started the process of recalibrating rates to somewhat less restrictive levels.Tomorrow looks different based on whether you take more signal from levels or trends.With the economy now in a good place and interest rates off their recent peak but also off their historic lows, the Fed is in position to respond appropriately regardless of how the economy evolves.
Speech
Inflation Then and Now
Labor market conditions remain solid, while inflation remains somewhat elevated. It makes sense to stay modestly restrictive until we are more confident inflation is returning to our 2 percent target.I recognize the fight against inflation has been long. But it is critical that we remain steadfast.It is tempting to focus on gaming out short-term factors, but it’s hard to make significant monetary policy changes amidst such uncertainty. So, I prefer to wait and see how this uncertainty plays out and how the economy responds.
Speech
What’s Next for the Economy?
We’ve come a long way quickly, but the job isn’t done. Inflation remains too high.There is an unusually wide range of potential paths for the economy going forward — from resurgence to soft landing to recession.What path do I see? I do anticipate some sort of a slowdown. I see that slowing as part of what it takes to bring inflation back to target. Price setters need to be convinced.Whether a slowdown that settles inflation requires more from us remains to be seen. We have time to reconcile competing narratives on demand and to test different views on the trajectory of inflation.
Speech
Looking Beyond Recent Data
I am still looking to be convinced, both that demand is settling and that any weakness is feeding through to inflation.I don’t like depending solely on data. That’s why I’ve made it my priority to be on the ground every week in the hopes of understanding the economy better.There is somewhat of a disconnect between the data and what I hear on the ground. I see an economy that is much further along the path to demand normalization than much of the data would tell you.But the question is how much of this softening is feeding through to inflation. The path for inflation isn’t yet ...
Speech
The Inflation Story
Inflation has proven stubbornly persistent.There is a plausible story for how inflation comes down. That story relies on weakening demand to control inflation.I am still looking to be convinced, both that demand is settling and that any weakness is feeding through to inflation. We will learn a lot more over the next few months.The Fed has moved aggressively against inflation. But we have been moderating the pace of those increases. Think of it as slowing your boat as you approach the dock.If coming data doesn’t support the plausible story, I’m comfortable doing more. The experience of the ...
Speech
Bringing Talent to Small Towns
As I talk to employers considering expansions and as I talk to community leaders trying to recruit firms, there's an increasing focus on talent.Small towns are going to have to up their games on the attraction, development and retention of talent.Small towns in our district are recruiting talent like they cultivate employers: they are telling their stories, making moving easy, creating incentives and strengthening their homegrown workforce pipelines.
Speech
The Need to Be Nimble
The challenge in assessing today’s economy is reconciling the strength of the recent data with the potential for weakness coming from the banking system.It is possible that tightening credit conditions, along with the lagged effect of our rate moves, will bring inflation down relatively quickly. But I still think it could take time for inflation to return to target.Policy will need to be nimble. If inflation persists, we can react by raising rates further. If I am wrong about the pricing dynamics at play, or about credit conditions, then we can respond appropriately.
Speech
The New Job Hierarchy
Where will demand and inflation go from here? It’s hard to know. I believe the labor market will be key to answering this question.For many employers, the labor market still feels out of balance. The pandemic era seems to have made the jobs market less predictable and left a number of employers scrambling for workers.Employers caught short aren’t standing still. They’re investing to increase labor supply, reduce labor demand and fight their way up the job hierarchy.The range of potential outcomes is still pretty broad. That’s why I supported our decision to hold rates steady at the ...
Speech
Recession Revisited
This has been called the most predicted recession in memory. Forecasts keep getting pushed out. No one banished the business cycle, so those who keep predicting a recession will eventually be right. But most recessions come suddenly.Some fear that the Fed’s commitment to reining in inflation will be that shock to the economy. To be sure, the Fed’s objective is not to cause a recession; it’s to reduce inflation, in line with our mandate.There is still a plausible story that inflation normalizes in short order and the economy dodges additional trauma. Certainly, last month’s inflation ...