The president of the Federal Reserve Bank of Richmond said Tuesday that he is not expecting an acceleration in the U.S. economy in the near future but instead for growth to continue at its current modest pace.
Consumers are likely to remain cautious about spending; productivity growth is expected to remain low, and the housing market will likely remain dampened – all of which are expected to hold back economic growth in the near term, said Jeffrey Lacker, who gave an economic forecast during a Rotary Club of Charlotte meeting uptown.
Lacker said he expects economic growth to continue at the rate it’s been at since the recession.
“While the acceleration that many have been forecasting for right around the corner would be welcome, that scenario seems less likely,” he said.
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Real gross domestic product – a price-adjusted measure of the value of economic output – has been growing at an annual average of only 2.1 percent since the recession, he said. That’s below the average rate of 3.5 percent in the 60 years before the recession, he said.
Last month, marked the end of the fifth year of economic expansion since the recession, Lacker said. He said he and other economists expected the economy to expand at a more robust pace. But annual growth of more than 3 percent in the near future is unlikely, he said.
Lacker said U.S. employment continues to rise at a strong pace but remains about two-thirds below the growth rate in the decades prior to the recession. He pointed to slower growth in the working-age population and retiring baby boomers as factors.
He said construction of new homes has picked up since the housing crisis but remains well below “normal” levels. Potential homebuyers, he said, seem to be more conscious of the financial risks of owning a home than before the housing downturn.