U.S. Growth is Strong: Fed’s Williams

February 18, 2016

Los Angeles, California – Underlying U.S. growth is strong, said John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco. Despite recent global volatility, the policymaker said he is confident that America remains in good shape.

“(I)f we look at the domestic market in isolation, it shows strong growth. We’re just contending with outside forces,” he said at a Town Hall Los Angeles meeting. “Sectors that are directly affected by the strong dollar, weak foreign demand, and falling energy and commodity prices have underperformed recently. But the hardest-hit sectors…account for a relatively small share of employment and GDP. By contrast, the large domestic services sector—including restaurants, health care, and business services—is doing quite well, and makes up the huge majority of American jobs. In last year’s impressive jobs growth, 93 percent were in services, including government.” 

Williams said he expected the effects of the drop in oil and strengthened dollar to peter out.

Williams also warned against overreliance on the stock market to gauge U.S. health. “Short-term fluctuations or even daily dives aren’t accurate reflections of the state of the vast, intricate, multilayered U.S. economy’” he said. “Remember, the expansion of the 1980s wasn’t derailed by the crash of ’87, and we sailed through the Asian financial crisis a decade later.” Williams does watch the markets, he said, but from the perspective of how it affects the Fed’s dual mandate. “What’s important is how it impacts jobs and inflation in the U.S.”

One area of concern was inflation, which remains below the Fed’s 2 percent target. However, Williams said he expected inflation to move back up “over the next two years.”

Employment, he said, was very positive. “All in all, we have reached or are close to maximum employment across a broad range of markers.” Williams predicted that the unemployment rate would continue to come down a bit further, “reaching the mid-4s later this year.”


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.