11:27 AM EST, 01/03/2025 (MT Newswires) -- The outlook for the US economy is tilted toward the upside for 2025, Richmond Federal Reserve President Tom Barkin said Friday at the First Friday Economic Outlook Forum.

"With business optimism so high and labor supply unlikely to continue to grow so robustly, it feels like the current labor market equilibrium is more likely to break toward hiring than toward firing, with, of course, some differences by sector," Barkin said.

While there is still uncertainty in the outlook for government economic policy, Barkin said that he expects "more upside than downside in terms of growth. That's why you see so much business optimism."

However, those risks extend to inflation as well.

"I see more risk on the inflation side," Barkin said. "Wage and product costs could see pressure. If they do, given recent experience with inflation, price-setters might have more courage to pass costs along."

As a result of the uncertainty from fiscal policy, market events and geopolitical conflicts, it would be good to be cautious and see how conditions play out, Barkin added.

"I expect the story for the coming year to be more about supply and demand - and perhaps geopolitics - than monetary policy," Barking said. That said, the Fed remains well positioned regardless of how the economy develops. Were employment to falter or inflation to reemerge, we have the tools to respond. I hope that provides some comfort as we embark into the new year."

The Richmond Fed president is next a voter on the Federal Open Market Committee in 2027.