Investing.com -- St. Louis Federal Reserve President, Alberto Musalem, expressed his expectation for the U.S. economy to continue its expansion throughout this year, during his remarks on Monday. However, he also noted potential risks to this growth, citing recent weaker-than-anticipated consumption and housing data, and mixed reports from businesses.

Musalem, in his prepared statement for a National Association for Business Economics conference, shared his optimistic outlook for the U.S. economy. He stated that the labor market remains healthy and financial conditions are supportive. However, he also pointed out that recent data, particularly in consumer spending and the housing market, have been weaker than expected, which could potentially pose a downside risk to economic growth.

He further mentioned that recent anecdotal reports from business contacts have been mixed, with some measures indicating a slowdown in business activity. This suggests increased caution among some firms, according to Musalem.

While Musalem continues to forecast good economic growth in the upcoming quarters, he indicated that he would become concerned if there were more signs of consumer pullback or a decrease in business confidence and investment plans.

At present, he views the current monetary policy as "modestly restrictive," which he believes is an appropriate setting considering inflation is still above the Fed’s 2% target. Musalem expressed his support for the U.S. central bank’s current "patient" approach to further changes to its key policy rate, stating that "more monetary policy work is needed to achieve price stability."

Recent data revealed an unexpected decline in personal consumption spending in January. Alongside an inflation rate that has been improving only slowly, some Fed officials have started to discuss the possibility that their dual objectives of controlling inflation and maintaining maximum employment could potentially clash.

The Federal Reserve is anticipated to maintain its policy rate in the current 4.25%-4.50% range at its meeting on March 18-19. Officials are hopeful for more confirmation that price pressures are reducing, and they are waiting for more details on the potential impact of the Trump administration’s trade and other policies.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.