00:00Where do we stand in terms of the basics of our current economy?
00:04Sure. You know, when I think about the economy and the outlook, I always start with economic fundamentals.
00:09Let's move away from the shocks and the uncertainty, and let's just talk about the fundamentals.
00:14So the fundamentals of the economy are quite solid.
00:17Business investment is strong.
00:19Businesses are cautiously optimistic.
00:21If you look at surveys, or we spend a lot of time as regional Fed presidents talking to CEOs out
00:26in the world,
00:27and cautious optimism is what I hear, then you think about consumers.
00:32Despite the fact that they're a little more or a lot more uncertain about their jobs,
00:37and they feel nervous about the state of the economy they find themselves in,
00:42they're spending. They're not giving in. They're continuing to be out there.
00:45And so those are strong pillars of how our economy goes forward.
00:49And you see productivity growth is rising. It's above what is our normal historical trend.
00:54That's a good thing for the economy.
00:56So those are the fundamentals, and I would say prior to the conflict in Iran and then the oil price
01:02increase,
01:02we had inflation coming down to our 2% target, making good progress there,
01:08and the labor market had stabilized itself.
01:11So that's the backdrop.
01:12So then, of course, we get the conflict in Iran,
01:14and we get the rise in oil prices and the uncertainty about how long the conflict will persist.
01:21And that has caused a lot of what I think of as scenario analysis, because the world is so uncertain.
01:27It's depending on how long the conflict lasts and whether the oil price rise is a persistent increase
01:33or continuing to go up or whether it comes back down to its pre-conflict levels
01:38and the economy goes back to those fundamentals.
01:41And that's where the outlook is right now.
01:42It's the good fundamentals, but a lot of uncertainty about what really persists.
01:47And ultimately, that creates scenarios for monetary policy,
01:51making us unable really effectively to say,
01:54we think we will do this by the end of the year.
01:56You can say, here's what we would do if this happened.
02:00Here's what we would do if this happened.
02:02Here's what we would do if this happened.
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