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Richmond Fed President’s Remarks on Economic Outlook

Richmond Fed president Thomas Barkin on Thursday downplayed calls for urgent rate-cutting action, emphasizing that the Fed has time to monitor the economy’s slowdown.

Barkin stated that the Fed has “some time” to determine whether the economy is “gently moving into a normalizing state” or if it needs more aggressive measures. He spoke at a virtual event hosted by the National Association for Business Economics.

Additionally, Barkin addressed recent concerns about the labor market, asserting that slowing wage growth signifies normalization rather than impending doom. He noted that the Fed would be concerned if job growth disappeared, but that is not an immediate worry. “What I hear from folks on the ground in the labor market is that people are cutting back on hiring, but not firing,” he explained.

On inflation, Barkin expressed optimism about favorable data expected in the coming months. He also observed a recent decline in market concerns regarding an impending recession, as bets for a 50 basis point cut in September dropped from 72% to 56%, indicating a shift back to the Fed’s perspective that economic growth is slowing rather than in crisis.

Conclusion

Barkin’s comments reflect a cautious but hopeful approach to the current economic climate and labor market trends.