Bank official predicts economy will continue to grow
CHARLESTON, W.Va. -- The president of the Federal Reserve Bank of Richmond's best guess is the national economy will continue to grow at a rate of just over 2 percent a year and that the pace will pick up in 2014 and beyond.
Jeffrey Lacker made the prediction at the 19th annual West Virginia Economic Outlook Conference, presented Thursday by West Virginia University's College of Business and Economics at the Civic Center.
Lacker said his prediction is based on four suppositions:
* Meaningful progress is made on federal budget issues;
* Risks posed by the European recession diminish next year;
* Household confidence about future income prospects continues to gradually improve; and
* There are no unanticipated shocks.
"Significant energy price increases would tend to temporarily reduce overall growth, although they ultimately would be likely to stimulate exploration and new production," he said.
"An unexpected downturn in growth among our major trading partners also has the potential to impede U.S. growth.
"On the other hand, a stronger-than-expected resurgence in confidence is not inconceivable; rapid and convincing progress toward fiscal sustainability, for example, might release a rush of pent-up spending."
Even though growth has been tepid since the Great Recession, "I believe that the fundamental prospects for longer-term U.S. growth remain quite strong," Lacker said.
"Increases in real income ultimately depend on the implementation of new products and services and new ways of providing existing products and services. We have a proven ability to generate advances in scientific knowledge and new commercial applications. The flexibility and resilience of our markets, along with a relatively well-educated population, make this an exceptional place to implement innovations.
"Our major challenge over the longer haul is to find effective ways to deepen the knowledge and skills of our people, because expanding our human capital is fundamental to improving our standard of living."
Contact writer George Hohmann at firstname.lastname@example.org or 304-348-4836.