Fed Governor Michael Barr highlighted solid growth, low unemployment, and continued progress on disinflation in the US economy. However, he flagged growing concern over rising trade-related uncertainty, which has begun to weigh on consumer and business sentiment.
In a speech overnight, Barr specifically pointed to the vulnerability of small businesses, which are more exposed to “disruptions to supply chains and distribution networks”.
These firms are integral to broader production networks, and failures in this segment could trigger cascading effects across the economy.
Drawing a parallel to the pandemic, Barr noted that “disruptions can have large and lasting effects on prices, as well as output,” leading to lower growth and higher inflation ahead.
