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Boston Federal Reserve President Eric Rosengren believes the U.S. economy is on track for GDP growth of just 1.7% for the second half of 2019.
Asked by CNBC’s Steve Liesman on Friday how much he thinks the economy will grow by year’s end, the Fed official said his “overall view is it’s going to be around potential for the second half this year, so the third and fourth quarter. My estimate of potential is around 1.7%.”
“I think that data that we have is weaker than it was before, but it’s actually pretty consistent with getting around 1.7%,” he continued. “If we start getting much lower than that, then that implies a rising unemployment rate, and then we’d really want to think about what’s happening in the economy.”
Rosengren’s comments came just days after the Atlanta Fed’s forecasting tool indicated that the economy grew by just 1.8% in the third quarter, down from a prior estimate of 2.1% and below the second quarter’s 2%.
That downgrade came after the release of dismal U.S. manufacturing data earlier this week, which sent the stock market tumbling. The Institute for Supply Management said U.S. manufacturing activity contracted last month to its lowest level in more than 10 years.
To help offset growing concerns about the pace of GDP growth heading into 2020, the Fed approved its second quarter-point interest rate cut last month. While Fed’s decision-making committee as a whole has not pointed to further cuts, members are split on how to adjust interest rates.
Three Fed regional presidents, including Rosengren each voted against the central bank’s 25-basis-point cut at the time. Rosengren has previously said he’d prefer to keep the funds rate steady while St. Louis Fed President James Bullard advocated for a steeper cut.
The Federal Open Market Committee’s next meeting begins on Oct. 29, and the policymakers will announce their latest decision on Oct. 30.