October 3, 2018 / 12:52 PM / in 2 months

UPDATE 1-Fed's Barkin cites Brexit, political crisis as potential economic shocks

(Adds comment on U.S.-Mexico-Canada Agreement)

Oct 3 (Reuters) - The U.S. economy appears strong but eventually might face shocks such as a “political crisis” or an abrupt and difficult exit by Britain from the European Union, Richmond Federal Reserve President Thomas Barkin said on Wednesday.

Barkin’s remarks come as economists and U.S. central bankers increase their focus on the prospects for a U.S. recession.

The Richmond Fed president, who has a vote on monetary policy this year but did not address the outlook for interest rates in his speech, said the U.S. economy was doing well and he would be keeping an eye on potential drivers of inflation.

He said he would be examining trends in worker productivity and compensation as well as business investment and durable goods prices.

“Please recognize that when I talk about these numbers, I’m not trying to anticipate shocks, such as a hard Brexit or a political crisis,” Barkin told a business conference in Charleston, West Virginia.

He did not specify what he meant by a political crisis. A hard Brexit is generally understood to be an abrupt exit by Britain from the European Union without measures in place to safeguard the British and European Union economies.

Uncertainties over the global economy could be holding back business investment, Barkin said, although he noted that an eventual signing of a new trade deal between the United States, Canada and Mexico could improve sentiment. (Reporting by Jason Lange in Washington Editing by Chizu Nomiyama Editing by Chizu Nomiyama)

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