Dallas Fed President Robert Kaplan recently crossed the wires arguing that the government shutdown would hurt consumer spending as it would leave 800,000 workers without a paycheck.
Key quotes (via Reuters)
- U.S. growth can diverge from the rest of the world, but not indefinitely.
- U.S. economy faces risks from global growth, weakness in interest sensitive industries, and tightening financial conditions.
- Jump in high yield credit spread last fall made him concerned about impact on economy of tightening credit access.
- Given long list of risks, the Fed would be “wise” to wait on any further policy action.
- Consumers still have capacity to spend.
- Fiscal stimulus wanes GDP could slow back to trend growth of around 1.75 percent.
- Despite very tight labor market, fed has luxury of patience, given low inflation.
- Inflation has been muted and expects that to continue.
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