The U.S. economy isn’t headed for recession right now, San Francisco Fed President Mary Daly said Tuesday.
“When I look at the data coming in, I see solid domestic momentum that points to a continued economic expansion,” Daly said, in written answers to questions on the Quora website.
Daly said that there are “considerable headwinds” facing the economy and she was worried that they are contributing to a fear that a downturn is right around the corner.
“So one thing I’m looking closely at is whether the mood gets so out of sync with the data that the fear of recession becomes a self-fulfilling prophecy,” she added.
President Donald Trump confirmed Tuesday that the White House is mulling a payroll tax cut to give the economy a shot in the arm.
Daly said she supported the Fed’s interest-rate cut in July as “an appropriate recalibration of policy” in response to the headwinds facing the economy.
She stressed her support for the rate cut was not based on her seeing “an impending downturn on the horizon.”
Daly has been president of the San Francisco Fed since last October . She is not a voting member of the Fed’s interest-rate committee this year.
Asked if the U.S. was “doomed” to low inflation, Daly replied no.
She said the Fed has tools it can use once it better understands what is driving low inflation.
Fed Chairman Jerome Powell is scheduled to discuss challenges facing monetary policy in a speech from Jackson Hole, Wyoming, on Friday.
Have a wonderful day.
