A day after President Trump changed course on cutting payroll taxes, the President of the Minneapolis Federal Reserve says economists are closely watching for the possibility of an economic slowdown.
"Once in a while it's reverse and long-term bonds have a lower interest rate than short-term bonds," Neel Kashkari said with Dave Lee on the WCCO Morning News from the State Fair Thursday. "That's the yield curve, and when that happens, it's been a very good predictor of a recession to come. That has now happened. It's a warning sign for us that we should be paying very close attention."
Kashkari adds that the recent tax cut led to just a short term boost which is now "fading."
Trump said Wednesday that he was abandoning the idea of cutting payroll taxes because "we have a strong economy."
Meanwhile, Kashkari also says he's "sympathetic" to President Trump's attempt to be "tough on China" with tariffs. The difficulty is balancing pressure, with sacrifices here at home.
"As I've traveled around our region, as I meet with farmers, when I meet with factories and manufacturers, they're feeling the pain," he said. "It's more expensive for them to export around the world. There are real costs. Do we have it right? I don't know."