Future of Economy according to Fed
January 15, 2011 Leave a comment
This is good news and bad news for Coral Gables. The housing recession will continue unabated so property values are not going anywhere. The city will be under pressure to increase taxes, no doubt. Growth may increase the income and assets of the wealthy, and that will help the to 15 percent of so of our residents. The retail district may see a slow increase in sales. All in all, the outlook for several years is not bright. Any attempt to reduce federal spending will have a bad impact on the economy–stimulus is still needed.
The U.S. economy will expand at a 3.5 percent to 4 percent rate during 2011, as it is “increasingly supported by private spending,” Rosengren said in his prepared comments. Growth won’t top 4 percent because the housing market’s recovery is likely to be weaker than usual, given the tightening of lending standards and high vacancy rates, according to Rosengren.
“If housing-related growth is not going to boost the recovery this time around, we may need policy — particularly monetary policy — to continue playing a stimulative role,” said Rosengren, who doesn’t vote on monetary policy this year.
Growth of 4 percent would still leave the unemployment rate close to 9 percent at the end of 2011, a level that’s “far above anyone’s estimate of full employment,” Rosengren said.