Fed’s Kohn sees recovery getting stronger
The economy is already recovering from recession and will get stronger in 2010, Federal Reserve Vice Chairman Donald Kohn said today in St. Louis. The recovery is being driven by a slowing of inventory liquidation and an improvement in home building, he said.
However, like other speakers at the National Association for Business Economics convention, Kohn acknowledges that the job market remains weak. He told the economists:
The difficult conditions in labor markets and the consequent implications for household incomes are important reasons for my expectation that the recovery in overall economic activity moving into next year will be restrained.
Kohn also said he’s not worried about inflation at the moment:
I expect that the persistence of economic slack, accompanied by stable longer-term inflation expectations, will keep inflation subdued for some time. Indeed, if inflation expectations were to begin to ratchet down toward the actual inflation rates that we have experienced recently, inflation could move appreciably lower.
Kohn said that because of tight credit conditions and excess industrial capacity, he’s not among the economists who are predicting a V-shaped recovery. He didn’t say, though, what shape he thinks it will take.
The Fed, he said, must recognize that uncertainty remains high:
We are still in largely uncharted waters when it comes to fully understanding how our economy will recover from the severe recession and financial disruptions of the past several years …. We need to base our policy on our best estimate of the evolution of inflation and output relative to our objectives, but we also need to be ready to adjust our plans if events don’t turn out as predicted in either direction.
(2 votes, average: 1 out of 5)
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
This sounds like someone talking out of both side of their mouth…very typical of someone from Washington D.C…..this is B.S.
We should always take advice from the ‘experts’.
Don’t you just love the rhetoric these guys use to describe the economy?
What a joke. Anything but the truth from these swindlers.. Let me interpret since these fools don’t have the backbone to be honest and realistic..
” The economy is already recovering from recession”.
Interpretation:
Oh really? For who? Tell that to the 8 million and rising who have lost their jobs and are in dire financial straits.. Or tell the other 5 million that are either underemployed or have fallen off the roles!! The true unempl0yment rate in America IS NOT 10 %!! IT’S MORE LIKE 15 OR 16 %…
” The difficult conditions in labor markets and the consequent implications for household incomes are important reasons for my expectation that the recovery in overall economic activity moving into next year will be restrained”.
Interpretation..
Difficult conditions in labor markets? How about terrible conditions.. There are no jobs and the few their are are either part time or pay less than a living wage…
Anyone who’s been reading and listening knows this is a JOBLESS RECOVERY FOR THE WORKING PERSON SO IN ESSENCE, IT IS NO RECOVERY AT ALL..
If you can’t find a job, at a livable wage, your not going to convince many intelligent people, (well, the dumbed down sheeple might be swayed), that a recovery is underway..
Economic activity will be “restrained”!!!
Interpretation:
Yea, I’ll say it’ll be restrained… As a consumer driven economy that basis it’s health on 75% consumer spending, it’s going to be just a little tough to recover when their are no jobs for people to make money to take out and spend right?
Truth be told, we’re just one mide-east war (oil embargo), and/or one terrorist attack away from all out depression in this country!
Oh, I (as well as the federal reserve hack) forgot to mention the efforts gaining momentum from China, Russia, Saudia, and other nations that have bought all our debt to change the currency used as the world’s reserve currency from the worthless dollar to gold and nor a combination of other currencies that actually have some value.
When that happens, we’ll all wake up one morning to the fact that the banks are all closed in America for a week and when they reopen, the dollar will be “de-valued” to 50% of it’s current value…
Think it can’t happen here? It’s going to happen.. It’s only a matter of time.
The Federal Reserve has the best Kool-Aid in Town! Keep it coming, the sheeple are drunk on Kool-Aid!
End the Fed! November 22nd. Join the push to rid ourselves of this parasite on our monetary system:
http://endthefedusa.ning.com/
I’d like to believe that those who are cahrged with watching the economics of the country have SOME idea of what they are speaking of…..
Has the country COMPLETLEY “recovered?” NO. Is it going to be a “QUICK” process? NO. I agree there are millions in financial troubles…I have not been too far off that mark & am STILL on thinner ground than I like….I DO think, that for many, this fall will be a HUGE “wake up call” (including me!) We are a society of “excess”- THIS is not NEW news! Everything has to be bigger, better & NEWER on a constant & regular basis….why? Some of us are so used to just tapping into our credit & living outside our means, it is simply “2nd nature.” One of the major lessons I have learned & HOPEFULLY, many have learned it as well….plan better, try harder to save for that “rainy day”….learn to live within your reality, not what you WISH you could have or WANT to have….
I’m SURE I’m going ot have LOTS of stones thrwn at me for my comments, but, some of our fall WAS of our own making…..we CAN come back from this…we WILL come out of it, strong again..but it won’t be over night & hopefully the lessons won’t be “lost” on us….
And Santa will be here on christmas to give all the good boys and girls their gifts.
So as consumers we needed this wakeup call to remind ourselves not to live beyond our means. That’s a fair statement.
When are we going to make our government have its own wake up call for tapping into credit and living beyond its means??
Are we absolutely sure he wasn’t talking about the economy in China?
If the economy does recover, just know that Republicans will not give him credit for saving us from a depression. The Republicans would’ve done nothing, offered no solutions, and maintained their “let them eat cake, pull yourself up by your non-existent bootstrap,” mantras.
I appreciate Mr. Kohn’s optimism but I’m not sure I see it here in St. Louis, particularly in the St. Louis Housing market. He mentions “an improvement in home building” but the Commerce Departments New Home Sales numbers for the Midwest for August show sales down over 31 percent from a year ago (and August 2008 was nothing to brag about) in addition the foreclosure rate in St. Louis is at a sickening level…For August it is up 63 percent from a year ago….also, with borrowers that are 90 days are more delingquent on their loans up in August over 50 percent from a year ago it does not appear we will see any slowdown in foreclosures in St Louis anytime soon….I wrote about this and included all the stats in a post at:
http://stlouisrealestatenews.com/foreclosure/foreclosure-rate-in-st-louis-increases/