They fear that the return to more-normal levels of short-term interest rates might eventually be accompanied by an especially sharp upswing in bond and mortgage rates, a softening in the prices of houses and equities, and problems for households in meeting higher debt obligations that, in turn, could result in a substantial weakening in spending.
While this news did not dramatically alter our outlook, it pointed to an economy with somewhat less momentum than we had thought.3  3 The Fed’s real-time assessment of job growth this year is discussed in Jerome H. Powell (2019), “DataDependent Monetary Policy in an Evolving Economy,” speech delivered at “Trucks and Terabytes: Integrating the ‘Old’ and ‘New’ Economies,” the 61st Annual Meeting of the National Association for Business Economics, Denver, Colorado, October 8, https://www.federalreserve.gov/newsevents/speech/powell20191008a.htm.