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Getty Images New York Fed President John Williams
New York Fed President John Williams on Wednesday pushed back on market fears of a looming recession, saying that the baseline economic forecast remains “a positive one.”
“Right now, the outlook is actually very favorable,” Williams said during a talk at the University of California, San Diego. He said GDP growth is around 2% rate, with a “very strong” labor market and inflation near a 2% rate.
Williams noted economists have been notoriously unable to predict recessions.
“Economists are really good at saying we just had a recession. They are not so good at expecting a recession,” he said.
Where is the economy going from here? Williams said it was a “mixed picture.”
Global economic growth has slowed, trade disputes, and other geopolitical tensions have led to higher uncertainty and this seems to have contributed to a pullback of business investment, and trade between nations seems to be slowing down, he said.
“I think there are definitely a lot of uncertainties and risks out there that we need to be navigating,” Williams said.
The Fed is grappling with the how to model trade uncertainty, he said.
“We don’t have as much experience with this,” he said.
And sentiment seems to change from one week to another, Williams noted.
Stocks fell sharply Wednesday on recession fears. The Dow Jones Industrial Average DJIA, -1.86% closed down 494 points to 26,078.
Williams, a member of Fed Chairman Jerome Powell’s inner circle, didn’t give any guidance about whether the U.S. central bank would cut interest-rates again at its late October meeting.
The Fed has cut rates by a quarter-point at its last two meetings.
Investors think there is a high probability the Fed will cut rates again on Oct. 30.
Earlier Wednesday, Richmond Fed President Thomas Barkin said the Fed might be cautious going foward given all the uncertainty facing the economy.
