Paulson: Monetary Policy and Productivity

Thanks for that kind introduction. I thought today I would give you my perspectives on the U.S. economy. These views are mine alone, and not those of anyone else on the Federal Open Market Committee (FOMC) or in the Federal Reserve System. A year ago today, I stood before a group like this one and described navigating last year’s economy as trying to drive through fog. Major government policy changes — trade, immigration, regulation, and fiscal — were all happening at once. It was hard to see the path ahead. Businesses reacted as you would think. When you drive through fog, you don’t want to put your foot on the gas; you don’t know what lies around the next turn. You also don’t want to slam on the brakes; someone could hit you from behind. So, you pull over, and put on your hazards. That’s what businesses did. They didn’t cut back, but they didn’t lean into new investments either. They didn’t fire, but they didn’t hire. They sat on the side of the road, waiting for the fog to lift. The Fog Lingers Now, most of last year’s policy questions seem much clearer. The tax bill has passed. Deregulatory efforts are underway. Net migration has plummeted. Federal government spending and workforce cuts are largely understood. Even though the recent Supreme Court tariff ruling has reintroduced some uncertainty, most businesses expect tariffs to be reinstated in a range they can roughly predict. But I can’t stand here a year later and tell you the fog has lifted. If anything, it’s deepened and spread. It’s as if we’ve all moved to San Francisco. Speaking of the Bay Area, BARKIN: PRUDENT TO HOLD INTEREST RATES STEADY AND AWAIT MORE CLARITY ON WHAT THE FED SHOULD DO NEXT FED'S BARKIN: EVEN BEFORE OIL SHOCK, PROGRESS ON INFLATION WAS AT RISK OF STALLING #OOTT Fed's Barkin: I will be watching inflation and expectations data carefully. FED'S BARKIN STATED UNEMPLOYMENT IS LOW, BUT THE LABOR MARKET SEEMS 'FRAGILE'; COMPANIES REPORT MINIMAL WAGE PRESSURE WITH SEVERAL APPLICANTS FOR EVERY POSITION.

US SECRETARY OF STATE RUBIO TOLD G7 COUNTERPARTS IRAN WAR SHOULD END IN MATTER OF WEEKS, THREE PEOPLE FAMILIAR WITH THE TALKS SAY RUBIO: WE EXPECT THE IRAN OPERATION TO CONCLUDE AT THE APPROPRIATE TIME, WE ARE TALKING WEEKS, NOT MONTHS RUBIO: IRAN MAY DECIDE TO SET UP A TOLLING SYSTEM ON THE STRAIT OF HORMUZ RUBIO: WE CAN ACHIEVE OUR GOALS IN IRAN WITHOUT ANY GROUND TROOPS