Richmond Fed President Thomas Barkin said in a speech that the economy “looks healthy”, with solid GDP growth, robust consumer spending and a strong labor market. There are headwinds from trade and uncertainty, that might be “lowering business confidence and dampening investment”. They might also ” lessen the effectiveness of traditional fiscal and monetary policy”.
He will be “closely watching the divergence between consumer spending and business investment; the strength of the U.S. economy versus weakness internationally; and the optimism of the stock market compared to the pessimism of the bond market.”
Barkin also spelt out “three meaningful conflicts” they’d watch closely. Firstly, consumer spending is strong but investment is weak. Secondly, the US economy is strong but international economies are weak. Thirdly, bond market is pessimistic but stock markets is still upbeat.
