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Investing.com -- Minneapolisw Federal Reserve President Neel Kashkari flagged worries about a tariff-driven recession following a sharp turn lower in economic confidence in the wake of President Donald Trump’s tariff rollout.
"The other piece of this [the tariff impact] is confidence,” Kashkari said. "If everyone gets nervous and pulls back spending at the same time, that itself can precipitate an economic slowdown, or in an extreme case, even a recession,” he added.
Kashkari’s concerns come as confidence in the economy has been battered in recent months as investors and consumer worry about a slowdown in growth and higher inflation.
“The last two months have been the sharpest reduction of confidence in the ten years I’ve been at the Fed, except for March 2020 when Covid hit,” Kashakri said in remarks at the U.S. Chamber Global Summit.
“We’ve talked to a lot of businesses, big and small all across our region, and it was remarkable how quickly they got concerned,” he said.
Kashkari also stressed the importance of an independent Federal Reserve, saying that it leads to better economic outcomes just as the White House accused Powell of playing politics.
White House Press Secretary Karoline Leavitt said Tuesday that President Trump believes the Fed and Chair Powell have been “making moves and taking actions” in the name of “politics rather than in the name of what’s right for the American economy.”