Boston Fed's Fuhrer says U.S. economy 'OK' for now
Photo / Renee Cordes
From left: Jeffrey Fuhrer leading the Mainebiz Five on the Future panel discussion with DECD Commissioner Heather Johnson; Justin Lamontagne of NAI The Dunham Group; Topher Mallory of Mexicali Blues, Split Rock Distilling and Royal Rose Syrups; and Deirdre Wadsworth, of Hardypond Construction.
Jeffrey C. Fuhrer, executive vice president and senior policy advisor at the Federal Reserve Bank of Boston, said the U.S. economy is fundamentally strong for now, with growth expected to average 2.5% in the first half of this year and then closer to 2% after that.
"We're likely to be OK for the next year or so," Fuhrer told more than 250 attendees at the Mainebiz "Five on the Future" forum Tuesday morning at Portland's Holiday Inn by The Bay. "After that, it's hard to say."
On the plus side, Furher said that 3.5% unemployment is at its lowest since 1969 while wealth and savings are both high. At the other end of the equation is uncertainty over trade policy, which affects not just the price of final goods but the whole supply chain.
"When that is disrupted, that's not an easy thing to adjust to," he said. Another challenge, he added, is that "the rest of the world is not growing as nicely as the U.S. is." Despite that, "Things look OK."
Turning his attention to economic development, Fuhrer shared data showing how the neighborhood where a person grows up affects their median income later in life. To illustrate the point, he presented case studies from Lewiston and Mobile, Ala., showing the income gap between two people who grew up in close proximity, in each of those two cities.
"So much of economic destiny depends on where you were born" and local circumstances, he said. "Personally, that's not OK to me."
Fuhrer, who is stepping down from the Fed next month to work in economic development, underscored the need to help people left behind economically but noted that that the effort needs to be grounded in research and data.
"It's about bringing humans into a stable economic life, so they can succeed," he said.
Following his keynote speech, Fuhrer moderated a panel discussion with Heather Johnson, commissioner of the Maine Department of Community and Economic Development; Justin Lamontagne, a partner and broker with NAI The Dunham Group; Topher Mallory, CEO of Mexicali Blues as well as co-founder of Split Rock Distilling and co-owner of Royal Rose Syrups; and Hardypond Construction President Deirdre Wadsworth, a 2017 Mainebiz Woman to Watch.
The discussion touched on a wide scope of themes from workforce development to housing, and will be covered in more detail by Mainebiz in tomorrow's Daily report.
Fed moves and projections
The Federal Reserve cut interest rates three times in 2019, and is scheduled to hold its next policy meeting on Jan. 28-29.
Monetary policy makers left rates unchanged at their last meeting in December and signaled they would remain on hold for the time being.
At that time, they projected 2.0% median GDP growth in 2020, slowing from 2.2% in 2019, and a median unemployment rate of 3.5% in 2020. That compared with a median rate of 3.6% in 2019.
While inflation is forecast to gather pace this year, it's expected to remain below the Fed's 2% target. Central bankers project a rate of 1.9% in 2020, up from 1.5% in 2019.
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