Federal Reserve Bank of Richmond President Tom Barkin discusses the outlook for the US economy and current business and consumer sentiment with Bloomberg's Matt Miller, Katie Greifeld and Mike McKee.
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1:47From your conversations, do you get the sense that firms are close to announcing layoffs?
2:35How long are companies telling you they can hold out before they have to make some sort of decision as to whether to go ahead and invest or to cancel plans?
3:20And I was thinking about DOGE, the Department of Government Efficiency, the cuts that DOGE made, have they had any specific impact on the companies, on the constituents in your district?
7:34Tom, could we have a technical recession because of this?
9:02Well, as we wrap this up, when you look forward, which part of the mandate do you think will see an effect first, on the inflation side or the employment side?
Bloomberg Audio Studios, podcasts, radio, news. We welcome our TV and radio audience worldwide. I'm Matt Miller alongside Katie Greifeld and Michael McKee, Bloomberg's international economics and policy correspondent. He is joining us now because we have an exclusive interview with the Richmond Fed President, Tom Barkin. Tom, great to have you on the program. Thank you so much for joining us. I have to start with the biggest question, which is in terms of the data. We've heard from Bostic and Kashkari that this data from Trump's trade war hasn't really told us all that we need to know quite yet, and maybe it won't until September. What are you seeing in your district?
Well, I'll agree with you that the published data shows an economy very much on the same trajectory that we've been on for the last year or two. Low unemployment, inflation settling toward target. There's a lot of questions about what happens when these tariffs are imposed. But you know how it is. There's a bunch of companies that advance ordered their product. They may have warned about price increases, but they haven't yet passed on the prices. The customers may accept the price increases or they may not. So, we'll just have to see how it plays out. I've been describing this when I'm talking to businesses, which you know, I do every day. I've been describing this as driving through fog. It's just very hard to drive when it's really foggy. And businesses are afraid to accelerate because they don't know what's around the next curve. And they're also afraid to put on the gas because you don't want someone crashing into you. And so, by and large, they're pulling over and putting on the hazards.
Well, to that point that you're constantly speaking to businesses, is anyone making big investments at this point or hiring decisions? From your conversations, do you get the sense that firms are close to announcing layoffs?
Well, so on the hiring side, you're definitely not seeing that. Lots of hiring freezes, lots of deferred hiring, and you see that in the data as well. In terms of investment decisions, investment moves that were already underway seem to be continuing. I've heard very few cancellations. But some of the big things that you might expect to happen when the terms of trade change, I think people are still waiting to get whatever they think is final. In terms of layoffs, you clearly hear and see about it in the government sector and in those sectors related to government spending. But outside of that, I just think people have the hazards on.
How long are companies telling you they can hold out before they have to make some sort of decision as to whether to go ahead and invest or to cancel plans?
Well, I think people are pretty patient on the investment. A lot of these are growth investments and they're, you know, waiting to see what the terms are. If you're thinking of moving, building a new facility somewhere, you kind of want to know what the rules are before you build it. And so, I think there's a lot going in there. I also don't think there's much case for cancelling. Nothing's really changed in the economic environment. You just have policy uncertainty and I think people are just going to wait policy uncertainty out. They do think there's a light at the end of the tunnel that there will be some certainty, whether it's the tax bill or some of the trade terms, but I think they're just waiting it out.
Hey Tom, on Saturday I went down to Fredericksburg to purchase a used motorcycle and I drove it all the way back here to New York through much of your district, I imagine, through Washington DC of course. And I was thinking about DOGE, the Department of Government Efficiency, the cuts that DOGE made, have they had any specific impact on the companies, on the constituents in your district?
Well, first of all, congratulations on making it through the Fredericksburg to DC 95 district. That's a place that I travel a lot and it's not very easy to travel in. There's no question that what we're seeing happen in terms of government spending cuts is affecting especially the DC metro area part of my district. You see it in both announced job losses. If you look at Challenger job announcements in February and March, they were quite significant, particularly government side. We see it in the week-to-week government spending numbers, in retail spending, particularly discretionary retail spending in the DC metro area. Job postings are down about a third. We're even seeing listings come up in the residential real estate area. So, you're definitely seeing that impact in DC metro.
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