Economic Outlook and the Labor Market

Philip N Jefferson: Economic outlook and the labor market

Speech by Mr Philip N Jefferson, Vice Chair of the Board of Governors of the Federal Reserve System, at the College of Business Administration, University of Detroit Mercy, Detroit, Michigan, 7 April 2026.

Central bank speech | 20 April 2026 by Philip N Jefferson PDF full text (1,293kb) | 23
pages Thank you for the warm welcome. It is an honor to speak here at the University of Detroit Mercy. I spent most of my career as an economics professor before joining the Board of Governors, so I feel right at home when I am back on a university campus.

This evening, I would like to start by updating you on my economic outlook. And since I have the privilege of being here in Detroit, a city synonymous with hard work, I will particularly focus on my labor market outlook. Next, I will discuss the possible implications of the outlook for the path of monetary policy. And, finally, I offer some thoughts about economic developments in the Southeast Michigan region before answering some questions.

For the U.S. as a whole, I see the economy as continuing to grow, led by resilient consumer spending and healthy business investment. The labor market is roughly in balance but susceptible to adverse shocks. Inflation remains above the Federal Reserve's 2 percent target. As a Federal Reserve policymaker, I am focused on achieving the dual-mandate goals given to us by Congress of maximum employment and stable prices. I currently see risks to both sides of that mandate.

Economic Activity

The latest data on economic activity are consistent with an economy that is growing about in line with estimates of its potential pace. For all of last year, gross domestic product expanded about 2 percent, as shown in figure 1. That was just a slight slowdown from the previous year.

For this year, I see the economy expanding at a similar or slightly faster rate than last year, though the uncertainty around my outlook is high. Investment in high-tech capital, particularly purchases tied to the expansion of artificial intelligence infrastructure, should support growth. In addition, I have taken note of the high pace of new business formation and broad deregulation activity among federal agencies, which could also stimulate growth. Effects from these developments could enhance productivity growth, which in turn supports economic growth and living standards. That said, there are also significant headwinds to consider. It is difficult to say how long the conflict in the Middle East and related disruptions could last. Should elevated energy prices persist, they can weigh on consumer and business spending. This potential adds considerable uncertainty to the global economic outlook.

The views expressed in this speech are those of the speaker and do not necessarily reflect those of the BIS. About the author Philip N Jefferson More from this author

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