Fed’s Williams “not that worried” about Q1 GDP numbers

July 8, 2015

Los Angeles, California – Citing research by his staff economists and others, Q1 GDP figures were, “much better than they seemed,” said John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco.

To account for seasonal patterns affecting GDP growth, SF Fed economists ran second round of adjustments not performed for official readings. “After making this modification for recurring seasonal patterns, the data show GDP actually grew about 1½ percent in the first quarter,” Williams said. “Based on these revised numbers, and relative to trend growth of around 2 percent, the first quarter appears to have been more or less on track.” Williams made the remarks in an address to commercial bank economists in Los Angeles on Wednesday.

The bigger issue, according to the official, was the weak data on inflation. While his forecast still sees inflation moving back up to the Fed’s 2 percent target over the next couple of years, “so far, that remains a forecast, not a reality.” “Recent inflation readings are fine, to use a technical economic term,” he said, “but they haven’t yet shown convincing signs that the underlying trend has bottomed out and is poised to start moving back up to 2 percent.”

While he sees “all the factors in place to meet our inflation goal by the end of next year,” Williams, who frequently notes that his decisions are “data-dependent,” said, “the point of being data dependent is that information drives your decisions; and while my forecast looks great, I am wary of acting before gathering more evidence that inflation’s trajectory is on the desired path.”

“Until I have more confidence that inflation will be moving back to 2 percent, I’ll continue to be in wait-and-see mode.” And, he said, “Every FOMC meeting is on the table.”


Matthew Schiffgens
Federal Reserve Bank of San Francisco
(415) 974-3246


The Federal Reserve Bank of San Francisco, with branch offices in Los Angeles, Seattle, Salt Lake City, and Portland, and a cash processing office in Phoenix, provides wholesale banking services to financial institutions throughout the nine western states. As the nation’s central bank, the Federal Reserve System formulates monetary policy, serves as a bank regulator, administers certain consumer protection laws, and is fiscal agent for the U.S. government. Follow us on Twitter at twitter.com/sffed.