Call it overstating the obvious: Federal Reserve Bank of Kansas City President (and soon to be voting member of the Fed’s Open market Committee) Thomas Hoenig said last night that 4% growth and continued consumer spending for the next 18 months would be likely to create jobs.
In a related development, economists across the country did their best imitation of their teenage daughters, rolling their eyes into their heads and muttering “Duh!” under their breaths.
This newfound accommodative stance represents a seachange for Hoenig, a well known inflation Hawk; In 2001, the KC Fed President voted against two of the interest rate cuts.
Bloomberg reported Hoenig’s remarks — Fed’s Hoenig Says Economy Needs 4% Growth For Next 18 Months to Boost Jobs — to an economic forum in Tulsa, Oklahoma. (Audio of Hoenig’s comments)
Here’s a quick taste:
”The economy must grow faster than productivity in order to create new jobs and it must grow faster than potential in order to reduce the unemployment rate,” [Hoenig] said. The regional Fed official was confident the economy would attain the growth rate he sought, citing increases in investment spending, rising stocks, the recent tax cuts and “very accommodative” monetary policy as reasons for optimism.
“Many of the headwinds facing the economy are diminishing and the economy is poised for more significant improvement,” Hoenig said. “I expect stronger growth over the next year-and-a- half, growth that should lead to sustainable increases in employment.”
His growth forecasts are more optimistic than the median estimate of 58 economists polled by Bloomberg News last week who anticipated growth of 3.8 percent in this and the next three quarters.
All of you Eco 101 students, please note this: Sustained economic spending and growth eventually leads to job creation.
Yes, this will be on the final . . .