Impact of Tariffs on U.S. Economy

In a recent address at the Puerto Rico Chamber of Commerce, Federal Reserve Bank of New York President John Williams highlighted the significant impact of President Donald Trump's tariffs on the U.S. economy. Williams projected that these tariffs could drive inflation up to a range of 3.5% to 4% this year.

Economic Growth and Unemployment Concerns

Williams expressed concerns over a potential slowdown in real GDP growth, attributing it to reduced immigration and the uncertainty surrounding tariffs. He anticipates growth to dip below 1%, with the unemployment rate possibly increasing from 4.2% to between 4.5% and 5% in the coming year.

Despite these challenges, Williams reassured that the Fed's current monetary policy stance is "modestly restrictive" and appropriate for the situation.

Long-term Inflation Expectations Remain Stable

While short-term inflation expectations have risen, Williams noted that long-term expectations are "well anchored," suggesting confidence in the economy's resilience over time.