US Fed Projects 7% Growth Rate This Year

John Williams, President of the New York Fed (Photo by Reuters)

[Asia Economy Reporter Yujin Cho] John Williams, president of the New York Federal Reserve Bank and considered the third most influential figure in the U.S. central bank, the Federal Reserve (Fed), projected the U.S. economic growth rate to be 7% this year.

On the 3rd (local time), at the annual meeting of Women in Housing and Finance (WHF), President Williams said, "Due to accommodative financial conditions, strong fiscal support, and widespread vaccination, the economic growth rate this year is expected to reach a speed not experienced since the early 1980s."

He emphasized, "The U.S. real Gross Domestic Product (GDP) growth rate will record 7% this year," adding, "Policy responses such as vaccination and fiscal stimulus have played a crucial role in achieving solid economic development."

The 7% growth rate he mentioned exceeds the Fed's forecast of 6.5% growth for the U.S. this year.

However, he expressed caution, stating, "This growth outlook does not imply that the Fed should shift its monetary policy stance in terms of employment and price stability goals."

He also noted that although the inflation rate will slightly exceed the 2% target, "we should not react overly sensitively to price volatility caused by the impact of COVID-19."

Fed Chair Jerome Powell also stated on the same day that the U.S. economic outlook has clearly improved. In a speech at the National Community Reinvestment Coalition (NCRC), he said, "The brighter outlook for U.S. economic growth is due to several factors, including increased COVID-19 vaccinations, expanded government support, and the reopening of businesses nationwide."

He added, "While some countries are still suffering terribly from COVID-19, the U.S. economic outlook has clearly brightened," and said, "Although we have not fully emerged from the crisis, I am pleased that substantial progress is being made."

However, he mentioned, "The impact of the recession has not been evenly distributed among all Americans, and those unable to bear the burden have been hit the hardest."

He then cited recent statistics showing that one year after the outbreak of COVID-19, in February, 20% of workers in the lowest income quintile were unemployed, while 6% of workers in the highest income quintile maintained their jobs.

The U.S. economic media MarketWatch evaluated that Chair Powell's remarks were more optimistic about the U.S. economy than the Fed's statement and press conference a week earlier.

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