Jefferson details economic outlook, energy effects, and policy path

Vice Chair Jefferson sees the U.S. economy continuing to grow, driven by resilient consumers and healthy business investment.

Gross domestic product expanded about 2 percent in 2025, with a similar or slightly faster rate expected this year, supported by business formation and high-tech capital investment, particularly in AI infrastructure.

The labor market is roughly in balance, with unemployment at 4.4 percent last month and job growth slowing to a modest pace, concentrated in a few sectors.

Inflation, however, remains above the Federal Reserve's 2 percent target.

The personal consumption expenditures (PCE) price index rose an estimated 2.8 percent for the 12 months ended in February, with core prices up 3.0 percent.

Uncertainty over tariff policy and recent energy price jumps complicate this picture.

Elevated energy prices, particularly from the Middle East conflict, add considerable uncertainty to the economic outlook.

A sustained energy price shock could have material implications, weighing on consumer and business spending.

Consumers nationwide face higher gasoline prices, impacting lower-income families disproportionately.

Energy costs are also embedded across the economy in transportation, manufacturing, and food production.

Jefferson noted that while the U.S. is a net energy exporter and Texas is the largest producer, potentially boosting local drilling activity and jobs, no region is immune to these pressures.