Impact of Tariffs on U.S. Economy

Federal Reserve Bank of New York President John Williams highlighted the significant impact of President Donald Trump's tariffs on the U.S. economy during a recent event. He forecasts that these tariffs could push inflation into the 3.5% to 4% range this year.

Economic Growth and Employment Outlook

Williams expressed concerns over a slowdown in labor force growth, attributing it to reduced immigration and the effects of tariffs and uncertainty. He anticipates real GDP growth to decelerate to below 1 percent, with the unemployment rate potentially rising to between 4.5 and 5 percent over the next year.

Monetary Policy Stance

Despite these challenges, Williams reassured that the Fed's current monetary policy stance is "modestly restrictive" and appropriate for the current economic climate. He also noted that while short-term inflation expectations have increased, long-term expectations remain stable and "well anchored."