September 22, 2026
Fed's Barkin says businesses are spending again and still hold pricing power, pushing back on recession fears.
What happened
Richmond Fed President Thomas Barkin said businesses and institutions are losing their reluctance to invest and spend after a long stretch of uncertainty. He described an economy that is firming rather than weakening, though he stopped short of calling it overheated. His comments, touching on persistent pricing power and healthy banking conditions, moved roughly 500 billion dollars in market value.
Why it matters
Barkin's read challenges the view that rate hikes need to destroy demand to cool inflation. If businesses simply expect less inflation, price pressures could ease without forcing a sharp slowdown. That pathway, from steady growth to lower inflation, would remove a major tail risk for corporate earnings and credit markets.
The case against
Many businesses still feeling pricing power is exactly what keeps inflation sticky and forces the Fed to hold rates higher. If companies can keep raising prices, the labor market stays too tight and the last mile of disinflation proves the hardest.
What settles it
Next month's Services PMI prices paid index, a direct check on whether service-sector pricing power is actually fading.