Report: Richmond Fed President Says US Sees ‘Demand Slowdown’

Federal Reserve Bank of Richmond President Tom Barkin reportedly said there is a “demand slowdown.”

At the same time, Barkin declined to say the country is nearing a recession, Seeking Alpha reported Thursday (May 25).

Speaking Thursday at the Southwest Virginia Economic Forum, Barkin said demand is cooling from unusually hot conditions seen during the pandemic, following the Fed’s raising of interest rates and bank crises, according to the report.

Barkin also said during the event that the labor market may remain tight due to the lingering effects of the pandemic and reduced immigration. He added that office real estate is distressed but other commercial real estate, like warehouses and multifamily housing, remain healthy, the report said.

The news comes at a time when Federal Reserve officials seem more divided than ever on whether more interest rate hikes are needed, with officials’ comments signaling different opinions on the issue ahead of the regulator’s meeting scheduled for June 13-14.

Some Fed officials seem to be leaning toward pausing any further rate hikes, advocating patience and saying the economy may not yet be showing the effects of past rate hikes. Other officials’ remarks, on the other hand, suggest they favor continuing the Fed’s credit-tightening campaign because the fight against inflation is not yet over.

The Federal Reserve said in a report issued Monday (May 22) that a record number of consumers — 35% — said they are worse off than they were a year ago. That’s the highest level since 2014 when that question was first posed by the central bank, according to the Fed’s report, “Economic Well-Being of U.S. Households.”

In comparison, in 2021, only 20% of households said they were worse off than they were the year before.

In another report, the Federal Reserve said the value of commercial and industrial loans from all commercial banks was $2.77 trillion in April, down slightly from $2.78 trillion in March, and down from more than $2.8 trillion in January.