James Bullard, Interview: Reuters (print)

Interview transcript is not available. —

Recession

“Wall Street’s very engaged in the idea there’s going to be a recession in six months or something, but that isn’t really the way you would read an expansion like this … the labor market just seems very, very strong. And the conventional wisdom is that if you have a strong labor market that feeds into strong consumption … and that’s a big chunk of the economy … it doesn’t seem like the moment to be predicting that you have a recession in the second half of 2023.”

“If you were really going to get a major financial crisis out of this, that index (St. Louis Fed Financial Stress Index) would spike up to a four or five. It’s zero now. So it doesn’t look, as of this moment, like too much is happening.”

Recession forecasts “are coming from models that put too much weight on the idea that interest rates went up quickly,” Bullard said. “What about the strong labor market? What about that feeding consumption? … What about the pandemic money still to be spent off, both at the state and local level and at the individual household level?”

Inflation

“Inflation is coming down, but not as fast as Wall Street expects.”

Fed Funds

“You want to be responsive to incoming data through the summer into the fall … You wouldn’t want to be caught giving forward guidance that said we’re definitely not doing anything and then have inflation coming in too hot or too sticky.”