Business is on Hold Because of Uncertainty, Says Fed President Tom Barkin (Full Interview)

Federal Reserve Bank of Richmond President Tom Barkin discusses the outlook for the US economy and current business and consumer sentiment with Matt Miller, Katie Greifeld and Mike McKee on "Bloomberg Open Interest."

Barkin said elevated uncertainty has led businesses to freeze hiring and hold off on future investment decisions.

Published data points to an economy on the same trajectory it’s been on over the past year or two — with low unemployment and inflation moving toward the central bank’s 2% goal — but there’s a lot of questions about what will happen once tariffs are imposed, Barkin said during an interview with Bloomberg Television.

“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,” Barkin said Tuesday.

Some Fed policymakers have said they expect higher unemployment and inflation as a result of the tariffs, though its unclear how both will unfold in the coming months. Sentiment among households and businesses has sharply deteriorated this year, though consumer spending continues to show signs of resilience.

“Consumer sentiment, which historically has been strongly correlated with consumer spending, has not seemed to be for the last two or three years,” Barkin said. “Nothing I’m seeing in the real time spending data suggests that spending is dropping.”

The central bank has held interest rates steady this year, biding time to see how the administration’s policy changes will shape the economy. Some Fed officials have indicated it could take months to gain the clarity needed to lower borrowing costs, as uncertainty around tariffs lingers.

When asked about the tax and spending bill moving its way through Congress, Barkin recalled conversations he’s had in rural Virginia. While he noted this hasn’t garnered much focus in small towns, he said people wonder how any changes to health care could affect rural hospitals.

People are “just waiting to see where Washington lands on this,” he added.

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