MNI: Fed's Williams Expects US Growth To Slow Considerably

New York Fed President John Williams said Friday he's revised down his expectations for U.S. economic growth and now expects the unemployment rate to rise past 4% next year as the central bank remains resolutely focused on restoring price stability.

"I currently expect real GDP growth in the United States to be below one percent this year, and then to rebound slightly to around 1-1/2% next year," he said, a downward revision from comments just last week when he told CNBC that he saw growth in the range of 1-1.5% this year. "With overall growth slowing to below its trend level, I expect the unemployment rate to move up from its very low current level, reaching somewhat above 4% next year."

"The economy experienced a rapid recovery from the pandemic last year, but I expect growth to slow considerably this year as the waning effects of fiscal stimulus, less favorable financial conditions, and slower growth abroad all weigh on our economy," said Williams, who is also vice chair of the rate-setting FOMC.

"Although there are some signs that job growth has slowed in recent months, the labor market remains incredibly tight," said Williams in prepared remarks for a University of Puerto Rico event, and speaking soon after BLS data showed the U.S. added a stronger-than-expected 372,000 jobs. "There are now far more job openings than people looking for work, and employers are still struggling to fill roles."

In determining how quickly and how high to raise the rates in the future, Williams only said he will be data-dependent and nimble. "I am resolutely focused on restoring price stability, which is the foundation for a vibrant and healthy economy."

A Dallas Fed economist has told MNI inflation shows little sign of slowing from its May pace.