-
Latest tariff news hasn’t changed outlook much
-
Economy shows benign outlook with focus on inflation and wage growth
-
Fed must maintain independence to reach 2% inflation target
-
Solid economic growth and resilient consumer consumption attributed to healthy household spending
-
Reduced employment growth reflects slow growth in labor supply and demand
-
Expects pace of hiring to increase as uncertainty fades and firms adjust to Tariff environment
-
Effects from Tariffs expected to become more pronounced as costs pass to consumers
-
Current market challenges include housing affordability and scarcity of childcare
-
Fed will use range of indicators to make decisions during data unavailability
We also heard from Richmond Fed President Barkin:
-
Rate cuts so far helped support job market while waiting on inflation “last mile”
-
Unemployment remains low by historical standards while inflation stays above target
-
Sustained inflation miss since 2021 is taken seriously regardless of the “why”
-
Expects economy to remain resilient in 2026 with stimulus from deregulation and tax reductions
-
Most firms are not currently doing layoffs at scale
-
Recent jump in productivity should help businesses bear higher input costs
-
Shrinking growth in labor supply is a top concern for the US economy
-
Stretched consumers are resisting attempts to pass along Tariff costs
-
Underlying dynamics support consumer spending
Both Collins and Barkin maintain a cautious but generally optimistic outlook on the US economy, emphasizing that while a “soft landing” is in sight, the final push to 2% inflation remains a challenge. Collins highlights the transition to a new tariff environment and notes that hiring may pick up once firms adjust, though she warns of increased costs for consumers. Barkin views recent interest rate cuts as “insurance” for the labor market and suggests that strong productivity and upcoming fiscal stimulus from tax refunds will support growth in 2026
