Above, New York Fed President John C. Williams, left, at the MBA conference. Photo by Clarissa Garza.
NEW YORK CITY—Providing an overall economic outlook at the Mortgage Banker Association’s (MBA) Secondary and Capital Markets Conference, New York Fed President John C. Williams highlighted the “huge” imbalance between housing supply and demand and addressed the economic uncertainty, emphasizing that the Fed is closely monitoring the data.
At today’s opening event, Williams echoed previous “wait-and-see” approaches from the Fed.
“I think we are going to see bits and pieces of these effects, and I don’t even know how big they’ll be or what they’ll look like in terms of the magnitude, but it will come over time in pieces,” Williams said. “It’s not going to be, ‘In June, we’re going to understand what’s happening here, or in July.’ It’s going to be a process of collecting data, getting a better picture and watching as things develop.”
As an economist, Williams joked that he only knows two words: supply and demand. Besides affordability, he said, one of the main issues in the housing market is the lack of supply—at all levels.
“What I hear from every group that I talk to—business leaders, bankers, people in financial markets, but also community leaders—is that housing affordability is the number one issue,” he said. “There’s a number of things that can be addressed. A lot of these are actually more state and local, maybe local, and to really try to find ways to constructively create more space for housing supply, because I think the demand is there otherwise.”
To address this lack of supply, Williams emphasized the need for stakeholders to come together and “find pragmatic solutions.”
“I think there’s some national things that maybe could be done to help this, but I think a lot of the work is really more at the state and local level,” Williams said.
Although the data is showing a strong labor market, a low unemployment rate and wage growth consistent with low inflation, Williams said, when thinking about what’s going to happen next, the key word for the economy is uncertainty.
“There’s uncertainty about trade policy. There’s uncertainty about geopolitical events. There’s uncertainty about fiscal policy,” he said. “Right now, the economy is in a great place. Monetary policy is well-positioned, but again, we’re looking ahead. A lot of uncertainty. A lot of things can shift.”
While there have been concerns shown in the “soft data” through anecdotes, surveys and the Beige Book, the Fed, Williams said, is focusing on how this is translating to decisions households and businesses are making—into the hard data of employment and inflation.
Concerning foreign investors, Williams upheld that U.S. Treasuries continue to be “safe assets to turn to.” Over the last few months, though, there have been “rumors, concerns” about these investments, but he said that is mostly “people talking about things.”
“Clearly, investors around are thinking about how they want to best invest their portfolios,” he said. “The U.S. economy, still, when you look past all of that, is seen as an incredibly dynamic, high-growth economy and, relative to our peers, one that is very safe and sound.”
On the home front, the household surveys are showing that people are nervous about the economy, Williams added.
Imports into the U.S., during the first quarter, grew at the fastest pace they have in over 75 years, he said.
“They went out and bought a bunch of cars in March before the tariffs kicked in.”
Although surveys aren’t perfect indicators of what consumers will do, Williams said that we might see some slowing of consumer spending.
“My view is the economy is likely to slow this year, relative to growth in the last year, but not anything worse than that,” he said. “As an economist, I’ll say that there’s a lot of uncertainty, especially uncertainty that you hope will kind of be figured out in the next six months or so…It makes sense, you know, to wait it out.”
