FOR NORTH BAY BUSINESS JOURNAL | January 19, 2017, 5:27PM
FAIRFIELD — “The U.S. economy is healthy and the financial system of the U.S. is much more resilient today than it was prior to the Great Recession that hit bottom in 2008,” said John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco at a Solano County economic conference today.
He was the
keynote speaker before more than 200 county business leaders and public
officials at Solano Economic Development Corporation’s 34th annual meeting. Fed
monetary policy has two key goals — to maximize employment and achieve price
stability to avoid inflation, Williams said. The ideal situation would be to
maintain an unemployment rate between 4.75 percent and 5 percent — since full
employment is not practical with some people between jobs, students who are not
working, etc. Today’s 4.7 percent rate has achieved the first goal with some
140 million people employed in the workforce.
He said in 2009
the unemployment rate nationally was 10 percent. Back then, the unemployment
rate in in the Solano area was 12.5 percent. “Since then we’ve added 15.5
million jobs, and the local unemployment rate in this county is down to 5
percent,” he said.
Williams noted
that the U.S. added 180,000 jobs a month on average during 2016, but that the
new norm for job creation moving forward will probably be in the 80,000 jobs
per month range.
He observed
that national gross domestic product growth in 2016 was about 2 percent and
sees this rate remaining about the same, or perhaps a little lower, in 2017.
Williams believes average GDP growth could be between 1.5 percent and 1.75
percent this year and into 2018.
“There are a
lot of uncertainties when it comes to setting the Federal Reserve System’s
central bank U.S. funds base rate, currently at 0.75 percent after two
increases,” he said. The last increase occurred in December.
According to
Williams, to achieve the price-stability objective involves balancing future
upside and downside uncertainties when setting monetary policy.
“Inflation has
been a big issue with the goal of keeping it between 1.75 percent and 2 percent
year over year — which we have done,” he said.
While more
incremental increases are anticipated over the next year or so, he believes it
is time to move toward a long-term, neutral monetary policy that will not stall
a recovery but rather continue to expand the economy as long as possible.
However, he
cautioned that when an economic recovery lasts for a long time, market forces
can lead to a downturn. For example, oil and housing prices are rising
dramatically again. While history shows that the U.S. has had a recession about
once every four years, the current recovery is one of the longest on record,
with almost seven years of slow economic growth. One variable fueling the rebound
is the gradual nature of the ongoing turnaround.
At the same
time, Williams said there is a huge difference between today’s economy and
factors that led to the 2007–2009 “great recession.”
“Banks are now
required to keep higher reserves, and have more liquidity,” he said. “There is
also a greater understanding of the interrelationships between the various
segments that comprise the financial infrastructure of our country.”
The Solano EDC annual meeting also featured at
presentation by four-star Gen. Carlton D. Everhart II, commander of the Air
Mobility Command that includes Travis Air Force Base in Fairfield. He recapped
the mission of this command and the contribution made by the local base, its
24,000 uniformed personnel and dependents, to the regional economy.
Sandy Person,
president of the Solano EDC, provided an overview of economic development
highlights leading to a total gross regional product of $19.65 billion. Here
are the economic contributions from just the top five Solano County industry
sectors: Food and beverage ($0.81 billion), biotech and biomed ($1.28 billion),
logistics ($1.47 billion), Travis AFB ($1.69 billion) and advanced materials
($2.23 billion).
Link to original article found in the North Bay Business Journal.
Link to original article found in the North Bay Business Journal.