New York Fed President Supports Cutting Interest Rates to Protect Job Market

On Wednesday, John C. Williams, president of the Federal Reserve Bank of New York, spoke with The New York Times. Below is a full transcript of his remarks during the 45-minute interview. It has been edited for brevity and clarity.

Colby Smith: Without the government shutdown, we would have had a jobs report in hand at this point. And obviously we’ll get into all the details shortly, but when it comes to the shutdown itself, the economic impact depends on how long it lasts and how big it is. President Trump has already warned that there could be massive layoffs, no back pay and spending cuts.

So how much of a hindrance do you really think this is? I know the usual thinking is that once the government reopens, activity will begin to normalize, but is there anything different about the current moment, given the fragility of the job market?

John Williams: We have some past experience, and it happened in a certain way. In the very short term this affects employment and GDP and generally these have returned to more normal levels once the lockdown ends. Of course, it is difficult to predict the future based on a few past episodes, which have been of different duration, and so we will just have to rely on the data, observe how it evolves and see the effects on the economy, especially those that could persist beyond the short term.

How do you plan to overcome the data shortage? If you are dependent on data, it is easy to live under normal circumstances, but when you don’t get the real data, it is much more difficult. And I think we all understand that alternative sources are not as complete or consistent as government data.

Official government statistics, whether on the labor market, GDP, prices and everything else, are the gold standard for macroeconomic data. We rely on this data. We study it in every detail to make sure we have the best understanding of what’s happening in the economy. So this is a missing piece until after the shutdown, when this data will then be released.