Good times may be ahead for the US economy! Alberto Musalem, president of the Federal Reserve Bank of St. Louis, is confident about this. Growth is possible despite existing risks! That is the optimistic outlook from the head of the St. Louis Fed.
According to Musalem, the US economy will continue to expand throughout 2025. However, he pointed out potential risks, citing weaker-than-expected consumer spending and housing market reports, as well as mixed data from some companies.
Speaking at the National Association for Business Economics conference, Musalem presented an optimistic forecast for the American economy. He believes the labor market remains strong, and financial conditions are favorable. The only major risk to US economic growth is current macroeconomic data, especially consumer spending and housing market trends. However, the situation may stabilize.
Previously, Musalem mentioned that some economic indicators suggest a slowdown in business activity. "Recent anecdotal reports from business contacts are more mixed, and some measures indicate that business activity has slowed, suggesting increased caution at least among some firms," he added.
Despite this, Musalem predicts solid economic growth for the US in the coming quarters. The main concerns are a decline in consumer spending or a drop in business activity and investment plans.
For now, Musalem considers the Federal Reserve's current monetary policy "modestly restrictive" since inflation remains above the 2% target. He supports the Fed’s cautious approach to adjusting interest rates, believing that more monetary policy efforts will be needed to achieve price stability.
At the upcoming March 18–19 meeting, the Federal Reserve is expected to keep the key interest rate within its current range of 4.25%–4.50%. Officials are hoping for more signs of easing price pressures and are awaiting additional information on the potential impact of President Donald Trump’s trade strategy.
