Fed’s Barkin: The biggest risk to growth is probably the unemployment rate

Richmond Fed President Thomas Barkin noted that while the Fed has made strong progress so far, there’s still more work to be done to keep the momentum going.

Key Quotes

Fed is making great progress but needs to keep it going. 

There is still more demand for housing than supply. 

The better way to address housing imbalance at this point is to build more, not suppress demand. 

The current level of unemployment is fine, whether it is normalizing or weakening is something still to be determined. 

Companies still feel labor is short on a long-term basis, are not firing though job growth is slowing. 

Important that all banking regulators agree on appropriate regime. 

U.S. is only advanced economy where GDP is now beyond pre-pandemic trend. 

The drivers of growth include wealth effects for higher income families, low unemployment, real wage increases. 

Biggest risk to growth is probably the unemployment rate, a cycle of layoffs would dampen spending. 

A significant market correction could also cause families with more net worth to slow consumption.

Hard to assess impact of tariffs, but there will be some ammount of cost pressure, some movement of jobs, depending on what is implemented.