Risks to the Outlook Let me turn now to the second category of crosscurrents facing the U.S. economy: the risks around the modal outlook. Policy uncertainty has been elevated recently and has been cited as an important factor in the financial volatility late last year.
Although some of the risks have been anticipated for some time, recent events have brought them into heightened focus, and the accumulation of these risks could lead to some erosion in sentiment that could in turn feed into activity. Trade dispute escalation remains a risk.