Some Fed officials expressed their concerns over trade tensions and the impact on confidence and the economy at a Dallas Fed conference yesterday.
Dallas Fed President Robert Kaplan said “I’m watching very carefully how these trade tensions unfold because I have a concern.. whether that could cause some deceleration in the rate of growth.” And, “new development over the last month has been increased trade tensions and more business uncertainty, and it’s going to take a little while to sort out how that might unfold, or how long that might last.”
San Francisco Fed President Mary Daly said for now “the data is good, but the mood is teetering”. The economy’s momentum would be an upside risk to growth ” if we get a relaxation or a reduction in the uncertainty”. However, she warned that if uncertainties persist, “that’s a downside to the economy, because the uncertainty has real effects, but it also has effects on confidence, and that confidence feeds back into investment.”
Richmond Fed President Thomas Barkin and Atlanta Fed President Raphael Bostic also warned that uncertainties around trade could hurt growth.