“After digging through the data, consulting our economic models, and gathering a Main Street perspective from our extensive network of business contacts, I come away with the sense that economic growth is on a strong trajectory,” said Bostic. “It’s on solid footing and hasn’t been materially pushed higher or lower.”
Last month, Powell mentioned that loss of business confidence could reduce investor capital and the long-term effect on the financial markets are reasons that could bring trade wars under heavier scrutiny by the Federal Reserve. However, without hard data to substantiate these concerns as a result of the trade wars, Powell could not definitely say that tariffs are to be dealt with head on just yet.
The capital markets will get an idea of just how strong the economy is when the third-quarter GDP reading is released on Friday. Market prognosticators are expecting the number to hover around 3.3 percent.
The Atlanta Federal Reserve’s tracker estimates GDP to come in around 3.9%, but even Bostic acknowledges that the economy is by no means impervious to pain from external factors disrupting growth, but is still strong enough to support itself.
“That does not mean that the trajectory for the economy is immovable,” Bostic said. “There are ample reasons for a central banker like me to be concerned. But, from my perspective, the economy is performing well enough to stand on its own without support from accommodative monetary policy.”
For more trends in fixed income, visit the Rising Rates Channel.