Chicago Federal Reserve President Austan Goolsbee said the U.S. economy could also be at risk of a recession if China experiences a major downturn, during an armchair talk Wednesday where he emphasized policymakers remain in a position to cut interest rates as inflation slows.
“It’s unrealistic that if the second-biggest economy had a huge recession, that that wouldn’t be a risk of recession for the U.S., if only through the freak-out channel” where business investment and confidence retreat, he said. Goolsbee didn't make any specific prediction about how much China's economy might stumble, while indicating other geopolitical risks such as commodity prices that could rise amid Middle East conflict and pressures from any new round of U.S. tariffs. (See: MNI INTERVIEW: Fed Could Cut As Early As June - Quarles)