Philadelphia Fed Chairman Upbeat About 2004 Econom
Washington, DC, Jan. 16--The year 2004 will be a "good year" for the US economy, with a "gradual" increase in employment and continued recovery from lean years past, Anthony Santomero, chairman of the Federal Reserve Bank of Philadelphia, said.
"Despite December's disappointing payroll numbers, the recovery continues to gain traction, and we seem to be moving toward a well-balanced and self-sustaining economic expansion," he told a meeting of the South Jersey Bankers Association in Cherry Hill.
"I expect economic growth to continue in 2004, with GDP (gross domestic product) growing at a healthy pace and with labor market conditions improving gradually," he said.
But he added: "After three years of sub-par performance, the economy has considerable ground to make up, and inflationary pressures will likely remain subdued."
Santomero noted that most forecasters were calling for improved economic performance in 2004.
"They expect healthy growth in overall demand emanating from continued strength in consumer spending and a revival in business spending," he said. "I concur with that prognosis.
"The reasoning is fairly straightforward," he said. "The consumer, who has been the mainstay of the economy over the past three years, will continue to spend in 2004.
"Despite early forecasts of gloom, the sales figures for the holiday season just completed generally met expectations--the best numbers since 1999. This suggests that the household sector is willing to continue spending.
"In addition," said Santomero, "consumer spending will get another boost from the federal income tax cuts enacted last summer. The cuts were retroactive to January, so many taxpayers will receive refund checks this spring.
"As a result, most economists expect that we will see solid growth in consumer spending this year, with sales of homes and autos expected to remain at high levels."
