NY Fed President Williams Says Economy Giving Mixed Signals

Chris Gaetano
Published Date:
Sep 4, 2019

New York Federal Reserve Bank President and CEO John C. Williams, in a recent speech, said that while headline metrics such as the GDP and unemployment rate paint a rosy picture, they must be considered alongside other measures that indicate an uncertain future. 

On its face, he said, "the economy is in a favorable place." He pointed to moderate economic growth as seen in the latest GDP numbers, consistent job gains month to month, low unemployment and even low underemployment. At the same time, however, he observed that other metrics point to a need for a more nuanced understanding of the economy. 

"If we look beyond the headline GDP figure, which remains good, there are more mixed signals coming from different sectors," Williams said. "Robust consumer spending is balanced by signs of slowing business investment. We’ve also seen a decline in exports and weakening manufacturing data, reflecting slowing global growth and uncertainty related to trade and geopolitical risks."

The Fed has also been troubled by persistently low inflation. Given the current state of the economy, "inflation somewhat below our longer-run goal would not be such a big deal," he said, but in combination with slowing global growth and uncertainties related to trade and other global developments. it could be a sign of trouble to come. This was why, said Williams, the Fed recently decided to cut rates for the first time in years. 

"Low inflation is indeed the problem of this era," he said. "The current outlook of moderate growth, low unemployment, but stubbornly low inflation is a reflection of the broader economic picture—the July rate adjustment an appropriate response to ease financial conditions and support the economy."

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