Fed's Barr Sees Supply-Chain Disruptions as Risk

Bloomberg

15-05-2025

00:00
In my view, the economy is on solid footing with solid growth, low and stable unemployment and inflation continuing to come down towards our 2% target. But the outlook has been clouded by trade policies that have led to an increase in uncertainty, contributing to declines in measures of consumer and business sentiment. Potential disruptions to supply chains and distribution networks are particularly acute for small businesses, which are less diversified, less able to access credit, and hence more vulnerable to adverse shocks. Small businesses play a vital role in production networks, often providing specialised inputs that can't easily be sourced elsewhere, and business failures could further disrupt supply chains. As we saw during the pandemic, such disruptions can have large and lasting effects on prices as well as output. If these disruptions were to occur, we'd likely see lower growth and higher inflation ahead. That's the macro view. At the level of individuals and households. Small businesses are a vital basis for financial security and economic mobility. Outside of stock ownership and retirement savings. Home ownership is responsible for 45% of household non-financial wealth, with business equity right behind at 34%. Those who are self-employed, as most small business owners are, have an average of four times as much wealth as those who are employed by others and twice as much as retirees. Successful entrepreneurship also correlates strongly with upward mobility, with studies showing business owners more likely to move into higher income brackets than their non entrepreneurial counterparts. These opportunities matters a great deal to individuals, families and communities, and they also matter in promoting a strong economy with stable prices and low unemployment. Key to the Fed's mission.