Driving through Economic Fog

Tom Barkin

Speech from Federal Reserve Bank of Richmond

Abstract: With all this change, a dense fog has fallen. It’s not an everyday, “forecasting is hard” type of fog. It’s a “zero visibility, pull over and turn on your hazards” type of fog. That’s what businesses seem to be experiencing. They for the most part aren’t pulling back, but they’re not pushing forward either. We are also seeing signs of caution from consumers. For now, an uncertainty-driven drop in sentiment looks like it could quiet demand. The outlook once the fog lifts will in part depend on how long it lasts. With the labor market still solid and inflation still above target, our moderately restrictive stance is a good place to be. If conditions start to shift, we are well-positioned to adjust. Until then, like businesses and consumers, I am waiting for the fog to clear.

Keywords: business cycles; economic growth; inflation; monetary policy (search for similar items in EconPapers)
Date: 2025-03-27
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