Philly Fed Official Sees Second-Half 2009 Recovery
Charles Plosser, president of the Philadelphia district of the Federal Reserve, said in a speech today that he expects the economy to start a slow climb in the second half of this year.
So, in today's climate, that counts as terrific news -- we only have six more months of financial ruin to endure!
Plosser's speech at the University of Delaware today comes before this afternoon's release of the Fed's "Beige Book," its eight-times-per-year collection of anecdotal economic data from all of the Fed's 12 districts. The report is seen as a periodic snapshot of the economy.
"I expect the housing sector will finally hit bottom in 2009 and the financial markets will gradually return to some semblance of normalcy," Plosser said, according to the Associated Press.
Plosser said the recession -- already the longest of the past 25 years -- could end up being one of the longest since World War II. But he added he does not expect unemployment -- currently at 7.2 percent -- to hit double-digits, as some predict.
Plosser warned that the federal government's substantial presence in the private sector -- AIG, Fannie and Freddie, Citi, etc. etc. -- could extend the crisis if not closely monitored.
"We must consider the possibility that our presence in these credit markets will deter private-sector participants from returning to and restoring these markets to health," he said. "To prevent our policies from having these perverse effects, we should consider gradual increases in the cost of borrowing from these facilities to discourage their use and encourage other participants to return to the markets."
January 14, 2009; 1:10 PM ET
Categories: The Ticker | Tags: Beige Book, Federal Reserve, recession
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