Dallas Federal Reserve President Robert Kaplan expects U.S. economic growth to slow substantially in the fourth quarter because businesses worried about the trade war are cutting their inventories.
The central bank official attributed the anemic growth level to "deglobalization" in the form of tariffs the U.S. and China have levied against each other in their trade war.
While Kaplan did not put a specific level where he thinks GDP gains will fall, gauges from the New York and Atlanta Fed are estimating rises of 0.7% and 0.4% respectively. CNBC's own Rapid Update measure of economist expectations puts the number closer to 1.5%. Kaplan said the inventory reduction is probably cutting half a point off GDP.
Uncertainty over future conditions is at the center of the low expectations.
"This means people have been destocking and probably the reason they were destocking is there was a lot of pessimism over the last number of months over future growth prospects," Kaplan said. "We think things will stabilize. We've got a good chance to grow at 2% next year."
Over the long run, he sees the U.S. growing at a 1.75%-2% range, though he said even that slowed pace could come under pressure.
"It gets worse if we don't make some policy changes. We think over the next five or 10 years it's going to slowly decline," he said.
Those policy changes, he said, have to come on the fiscal side in terms of infrastructure spending and immigration reform.
As for the Fed's only monetary policy, he said interest rates are where they should be. The central bank in October approved its third quarter-point reduction this year, taking the overnight borrowing rate to a range targeted between 1.5%-1.75%.
"I think policy is in the right place now," Kaplan said, adding that he believes the "midcycle adjustment" that Fed Chairman Jerome Powell had alluded to this summer is over "for the time being."
In a speech Monday night, Powell signaled that interest rates are unlikely to rise anytime soon.
Kaplan is a nonvoting member of the policymaking Federal Open Market Committee, but still gets input to decisions and will get a vote in 2020.
Despite a generally positive outlook on the U.S., he and other policymakers continue to warn that future risks are skewed to the downside. The Fed repeatedly has cautioned about the state of the global economy as well as persistently low inflation and uncertainty over trade and its impact on business investment and consumer spending.
"I think weak manufacturing, weak global growth, weak business investment all relate to uncertainty regarding trade," he said. "If that got stabilized, I think we'd have a chance to see those measures improved."