Dudley ‘More Hopeful’ Growth Rebounding as Fiscal Drag Wanes

Bloomberg (19/11) -- Federal Reserve Bank of New York President William C. Dudley said he’s “getting more hopeful” the U.S. economy is gaining strength as the drag from fiscal policy wanes.

“While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015,” Dudley, 60, said in a speech today in Flushing, New York. “As growth picks up, I expect to see more substantial improvement in labor market conditions.” Economic growth isn’t yet sufficient to ensure the substantial labor market gains that the Fed has said are a prerequisite to any reduction in its $85 billion in monthly bond purchases, Dudley said. Policy makers, aiming to bring down unemployment now at 7.3 percent, have pumped up the central bank’s balance sheet to a record $3.91 trillion. “We’ve seen quite a bit of improvement” as unemployment has dropped, “but I don’t think we’ve really seen enough growth momentum to give us confidence we’re going to continue to see” gains in the outlook for jobs, Dudley said in response to an audience question. The policy-setting Federal Open Market Committee won’t taper its purchases until its March 18-19 meeting, according to the median estimate of 32 economists surveyed by Bloomberg News Nov. 8.