By Todd R. Hansen From
page A1 | January 20, 2017
FAIRFIELD — The top executive of the
Federal Reserve Bank of San Francisco told a gathering of business and
government leaders Thursday that the economy is healthy and the Fed’s monetary
policy focus has changed from short-term recovery to long-term growth and
stability.
“It’s more about getting the economy
on a consistent pattern,” said John Williams, guiding his left hand as if
following an upward trend on a chart.
He said he expects the gross
national product to increase by about 2 percent in 2017, and because of the
changing demographics of the labor force, he also expects productivity growth
to maintain a slower pace than historical levels.
Williams was one of two keynote
speakers at the 34th annual Solano Economic Development Corporation luncheon
meeting at the Hilton Garden Inn in Fairfield. The other speaker was Gen.
Carlton D. Everhart II, commander of Air Mobility Command out of Scott Air
Force Base, Illinois. The 60th Air Mobility Wing at Travis Air Force Base is
under his authority.
The four-star general also
touched on economic matters, noting the estimated $1.6 billion annual
impact Travis Air Force Base has on the regional economy and the $15 billion
economy his command generates globally.
Williams talked at length about the
national labor force, noting that is one of the critical pieces in the
Fed’s annual goals.
He said realistically, the country
has reached its maximum employment level, with an unemployment rate of about
4.7 percent. He also said that because of the number of retiring baby boomers
in an aging society, and the lower birth rate, the country needs to
create only about 80,000 new jobs each month instead of the 150,000
in the recent past.
The other critical piece in the
Fed’s goals is price stability. Williams said that is why interest rates
have been raised twice in recent months, and that he fully expects inflation to
be maintained at what he described as a healthy 2 percent. The price of oil,
which have increased in recent months, is a big part of that equation.
He said he wants to see a Goldilocks
economy, “not too hot and not too cold.”
Williams said the greatest threats
to and uncertainties about the economy remain the usual suspects of
economic pressures from Europe, Asia and shifting oil prices, and said the
challenges will have far less to do with a new administration and Congress.
“We always have uncertainties when
making monetary policy,” Williams said.
The shift to a stiffer regulatory
posture in the finance sectors will help in that regard, he said.
Asked what the effect of income
inequality might have on the economy, Williams did point out risks if that gap
continues to grow. He noted the negative impact it can have on consumer
spending. More importantly, he suggested, is the effect it has on the morale of
those who can no longer achieve the American dream.
“What we know is for people to live
the American dream, it is much harder if you start three steps back,” Williams
said.
From his perspective, he said it is
critical to invest in education to give the next generations a step up –
and that starts before kindergarten and continues through K-12.
“And that makes me worry about the
investments we are making in the youth today,” Williams said.
Reach Todd R. Hansen at 427-6932 or thansen@dailyrepublic.net.
