The Boston Federal Reserve thinks we’re going to be alright. Eric Rosengren, president of the Boston Fed, told CNN’s Julia Chatterley that he predicts the US-China trade war “doesn’t have a large impact on my forecast on the economy.”
“Both countries do have a strong incentive to try to get to an agreement,” said Rosengren. He said that the longer the trade war goes on, the more the potential impact it will have on the economy. “There’s a lot of uncertainty and uncertainty’s bad for the US economy as well.”
But beyond tariffs, the economy is “pretty strong,” he said. The unemployment rate is down to 3.6%, the lowest it’s been since 1969, when the United Sttes was sending its first man to the moon.
Still, there are conflicting signals with the inflation rate still slightly lower than forecasts of 2.1%.
“I would say the Fed reserve has been missing pretty persistently on those two percent inflation targets,” Rosengren said. But he believes that if wages continue to rise as they have been, inflation will also rise to match up with the Fed’s goals.
Once the Fed hits its inflation target, it’ll have a little more room to maneuver in the event of another recession.
If markets dip very low, Rosengren said the Fed will lend a helping hand: “We will react if it’s a very negative shock and we should, because that would be an indication that the economy would slow down.”
