Fed policymakers express concerns over economic and business sentiment

During a discussion panel hosted by the Federal Reserve (Fed) Bank of Atlanta, the San Francisco and Cleveland Fed Bank Presidents Mary C. Daly and Beth Hammack both took the opportunity to express concern about the current state of the US economy. While economic data remains firm, US trade policy has made many consumers and businesses increasingly sour. Atlanta Fed President Raphael Bostic also participated in the event, adding to his previous comments made on Tuesday.

Roughshod, on-again-off-again tariffs from the Trump administration threaten to overwhelm US trade logistics, which rely heavily on large-scale importing to meet domestic demand. As noted by several Fed policymakers in recent weeks, a cloudy trade outlook has made it difficult for businesses to invest in their operations and either hire or fire employees, freezing up typical business operations associated with a healthy economy.

Mary C. Daly highlights

Federal Reserve policy is in a good place.
highly sensitive to risk of inflation.
Net impact of Trump administration trade, immigration, other policies unknown.

Beth Hammack highlights

Sentiment data about the economy concerning.
Firms reluctant to release employees.
Will take longer to observe how business decisions are impacted by trade policy.
Currently the optimal move for the Federal Reserve is to refrain from taking action.
Federal Reserve well positioned to be patient.
Inflation outlook stays stable, potential shift could signal action from the Fed.
Inflation expectations remain well anchored

Raphael Bostic highlights

No recession expected, but uncertain when households and firms will feel comfortable making long-term spending decisions.
High profile inquiries, like trade policy, clarity appears to be moving further ahead