Fed's Schmid Flags 3.5% Inflation as Top U.S. Economic Risk

7 articles · Updated · Reuters · May 14

Jeffrey Schmid said inflation remains the most pressing threat to the U.S. economy even as growth stays positive and the labor market remains stable.
3.5% PCE inflation in March was still well above the Fed's 2% target, and April readings suggest headline PCE may have neared 4% and broadened beyond energy costs.
Schmid did not discuss interest rates, but his focus on persistent price pressures underscored a hawkish stance against cutting rates while inflation stays elevated.
Higher oil and gasoline prices tied to the U.S.-Israeli-led war against Iran are squeezing household spending power and raising business costs, though Schmid said the economy has shown remarkable resilience.
Strong business investment—especially in technology and AI—plus consumer spending supported first-quarter growth, while unemployment stayed low in what Schmid called a low-hire, low-fire job market.

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