A Case For Immodest GDP Growth

All in all, then, I expect noticeably stronger growth in overall activity this year than last. If I had to write down a forecast today, it would be pretty close to 4 percent. A rate of growth in that neighborhood would result in continued net gains in employment and further reduction in the unemployment rate.

Jeffrey M. Lacker President Federal Reserve Bank of Richmond

Federal Reserve officials have begun to push even harder against the Ben Bernanke master plan to spend the entire $600 billion set aside for the process of quantitative easing. Bernanke’s most recent argument, or rather an extension of his old one, is that unemployment may change very little over the next two years. The drag on the economy will be irresistible, and the stimulus is essential he told the Press Club late last week.

Lacker looks at the problem and its solution that other way around. In his world, the trouble is nearly already past. A 4% GDP improvement mean more jobs no matter what. The fix to all economic issues is already made

Lacker tips his hate to the troubles with housing and ongoing credit problems with banks. He says very little about what becomes of the recovery if austerity at the federal level kills a huge amount of government spending. Any or all of these problems plus the long-term unemployment base of 6.3 million people are greater barriers to growth than he is willing to say.

Douglas A. McIntyre