According to San Francisco Fed head John Williams, Brexit isn't "a big deal for the U.S. economic outlook."
Question: What happened between January and today to make the Fed significantly dial back rate hike expectations?
Answer: The U.S. economy continued to slow...
In other words, why should we listen to Fed forecasters who are so continually on the wrong side of their own predictions? Well, we shouldn't.
Here's the key Brexit excerpt from the wider interview via MarketWatch and other delusional statements:
- Williams on Brexit: "And so even though I think [Brexit] is a significant event, I am not trying to downplay Brexit, I’m just saying that with a little bit of time, people have kind of gotten more reasonable and kind of sharpened their pencils and said 'ok what does this really mean for Britain, Europe and the global economy' and when you do that, it doesn’t seem quite a big deal for the U.S. economic outlook."
- Williams on the May Jobs Report bomb: "... A good chunk of the May weakness was either partly due to the Verizon strike effect but also due to some unusually good weather earlier in the year and this was payback for that. So when you take out the effects of the strike, and you adjust for the fact of the unusual weather pattern, you basically see a pattern that job growth has continued to be very good, above trend, through the six months of this year."
- Williams on Fed-induced financial market imbalances: "... If asset prices, real estate prices, continue to go further and further away from longer-term fundamentals I think that creates risk for the economy, I think it creates risks eventually for the financial system. I don’t think these are risks that are really powerful today. These are not things that worry me, “oh are we going to have a big crash next week or something,” it is just as these imbalances in the economy continue to grow slowly over time I think we will just be facing more difficult challenges in our economic and policy environment in a few years."