Even with an economy that keeps growing without pushing prices sharply higher, Federal Reserve Governor Susan Phillips says she stays up nights worrying.
“We can’t lower our guard down and declare victory in the battle over inflation,” Phillips said in speech to the Economic Roundtable of Jacksonville. “Central bankers are prone to worry, that’s what we’re paid the big bucks to do.”
Among the threats are the federal deficit, the U.S. trade gap and possible shocks that would disrupt vital supplies to the economy, such as crop losses from shifts in weather patterns related to El Nino. Then there are the potential bottlenecks that are related to the economy’s surprising strength, such as tight labor markets and factories operating closer to capacity.