PHILADELPHIA (KYW Newsradio) — Speaking on Wednesday during her first address to the Chamber of Commerce for Greater Philadelphia since taking office last summer, Philadelphia Federal Reserve President Anna Paulson shared the results of the Fed’s annual survey of local businesses and her predictions about the economy.
Paulson said she’s “cautiously optimistic” about inflation. She acknowledged that tariffs have raised the cost of goods, contributing to high inflation, but said she thought that figure would be down to 2% by the end of the year.
“Based on my reading of the evidence, I expect that we’ve already seen a lot of the price adjustments,” she said.
Paulson was less encouraging about the labor market. She noted the U.S. added far fewer jobs last year than in 2024, but said she was waiting for clarity on the factors behind that, including the role of artificial intelligence in driving growth without creating new jobs.
“Going forward, we could see a period of strong growth where relatively few jobs are created as AI becomes fully embedded,” she added.
The Fed’s annual survey of Philadelphia businesses shows uncertainty is holding back hiring. It also found uncertainty about government policies was the No. 1 business concern.
Paulson said this would be a challenge for the Fed, which, she said, can address a job slowdown with monetary policy but can’t do anything about a structural change in the demand for labor.
Still, she sought to reassure the Chamber of Commerce about her own policy choices.
“I’ll be focused on actions that promote price stability, maximum employment and monetary policy credibility,” she said.
Paulson did not address the ongoing pressure on the Fed from President Donald Trump, who wants control over setting interest rates.
Featured Image Photo Credit: Federal Reserve Bank of Philadelphia