Accessibility Statement Skip Navigation
  • Why PRWeb
  • How It Works
  • Who Uses It
  • Pricing
  • Login
  • GDPR
  • Create a Free Account
Return to PRWeb homepage
  • News
  • Resources
  • Contact
When typing in this field, a list of search results will appear and be automatically updated as you type.

Searching for your content...

No results found. Please change your search terms and try again.
  • News in Focus
      • Browse News Releases

      • All News Releases
      • Multimedia Gallery

      • All Multimedia
      • All Photos
      • All Videos
  • Business & Money
      • Auto & Transportation

      • Aerospace, Defense
      • Air Freight
      • Airlines & Aviation
      • Automotive
      • Maritime & Shipbuilding
      • Railroads and Intermodal Transportation
      • Supply Chain/Logistics
      • Transportation, Trucking & Railroad
      • Travel
      • Trucking and Road Transportation
      • View All Auto & Transportation

      • Business Technology

      • Blockchain
      • Broadcast Tech
      • Computer & Electronics
      • Computer Hardware
      • Computer Software
      • Data Analytics
      • Electronic Commerce
      • Electronic Components
      • Electronic Design Automation
      • Financial Technology
      • High Tech Security
      • Internet Technology
      • Nanotechnology
      • Networks
      • Peripherals
      • Semiconductors
      • View All Business Technology

      • Entertain­ment & Media

      • Advertising
      • Art
      • Books
      • Entertainment
      • Film and Motion Picture
      • Magazines
      • Music
      • Publishing & Information Services
      • Radio & Podcast
      • Television
      • View All Entertain­ment & Media

      • Financial Services & Investing

      • Accounting News & Issues
      • Acquisitions, Mergers and Takeovers
      • Banking & Financial Services
      • Bankruptcy
      • Bond & Stock Ratings
      • Conference Call Announcements
      • Contracts
      • Cryptocurrency
      • Dividends
      • Earnings
      • Earnings Forecasts & Projections
      • Financing Agreements
      • Insurance
      • Investments Opinions
      • Joint Ventures
      • Mutual Funds
      • Private Placement
      • Real Estate
      • Restructuring & Recapitalization
      • Sales Reports
      • Shareholder Activism
      • Shareholder Meetings
      • Stock Offering
      • Stock Split
      • Venture Capital
      • View All Financial Services & Investing

      • General Business

      • Awards
      • Commercial Real Estate
      • Corporate Expansion
      • Earnings
      • Environmental, Social and Governance (ESG)
      • Human Resource & Workforce Management
      • Licensing
      • New Products & Services
      • Obituaries
      • Outsourcing Businesses
      • Overseas Real Estate (non-US)
      • Personnel Announcements
      • Real Estate Transactions
      • Residential Real Estate
      • Small Business Services
      • Socially Responsible Investing
      • Surveys, Polls and Research
      • Trade Show News
      • View All General Business

  • Science & Tech
      • Consumer Technology

      • Artificial Intelligence
      • Blockchain
      • Cloud Computing/Internet of Things
      • Computer Electronics
      • Computer Hardware
      • Computer Software
      • Consumer Electronics
      • Cryptocurrency
      • Data Analytics
      • Electronic Commerce
      • Electronic Gaming
      • Financial Technology
      • Mobile Entertainment
      • Multimedia & Internet
      • Peripherals
      • Social Media
      • STEM (Science, Tech, Engineering, Math)
      • Supply Chain/Logistics
      • Wireless Communications
      • View All Consumer Technology

      • Energy & Natural Resources

      • Alternative Energies
      • Chemical
      • Electrical Utilities
      • Gas
      • General Manufacturing
      • Mining
      • Mining & Metals
      • Oil & Energy
      • Oil and Gas Discoveries
      • Utilities
      • Water Utilities
      • View All Energy & Natural Resources

      • Environ­ment

      • Conservation & Recycling
      • Environmental Issues
      • Environmental Policy
      • Environmental Products & Services
      • Green Technology
      • Natural Disasters
      • View All Environ­ment

      • Heavy Industry & Manufacturing

      • Aerospace & Defense
      • Agriculture
      • Chemical
      • Construction & Building
      • General Manufacturing
      • HVAC (Heating, Ventilation and Air-Conditioning)
      • Machinery
      • Machine Tools, Metalworking and Metallurgy
      • Mining
      • Mining & Metals
      • Paper, Forest Products & Containers
      • Precious Metals
      • Textiles
      • Tobacco
      • View All Heavy Industry & Manufacturing

      • Telecomm­unications

      • Carriers and Services
      • Mobile Entertainment
      • Networks
      • Peripherals
      • Telecommunications Equipment
      • Telecommunications Industry
      • VoIP (Voice over Internet Protocol)
      • Wireless Communications
      • View All Telecomm­unications

  • Lifestyle & Health
      • Consumer Products & Retail

      • Animals & Pets
      • Beers, Wines and Spirits
      • Beverages
      • Bridal Services
      • Cannabis
      • Cosmetics and Personal Care
      • Fashion
      • Food & Beverages
      • Furniture and Furnishings
      • Home Improvement
      • Household, Consumer & Cosmetics
      • Household Products
      • Jewelry
      • Non-Alcoholic Beverages
      • Office Products
      • Organic Food
      • Product Recalls
      • Restaurants
      • Retail
      • Supermarkets
      • Toys
      • View All Consumer Products & Retail

      • Entertain­ment & Media

      • Advertising
      • Art
      • Books
      • Entertainment
      • Film and Motion Picture
      • Magazines
      • Music
      • Publishing & Information Services
      • Radio & Podcast
      • Television
      • View All Entertain­ment & Media

      • Health

      • Biometrics
      • Biotechnology
      • Clinical Trials & Medical Discoveries
      • Dentistry
      • FDA Approval
      • Fitness/Wellness
      • Health Care & Hospitals
      • Health Insurance
      • Infection Control
      • International Medical Approval
      • Medical Equipment
      • Medical Pharmaceuticals
      • Mental Health
      • Pharmaceuticals
      • Supplementary Medicine
      • View All Health

      • Sports

      • General Sports
      • Outdoors, Camping & Hiking
      • Sporting Events
      • Sports Equipment & Accessories
      • View All Sports

      • Travel

      • Amusement Parks and Tourist Attractions
      • Gambling & Casinos
      • Hotels and Resorts
      • Leisure & Tourism
      • Outdoors, Camping & Hiking
      • Passenger Aviation
      • Travel Industry
      • View All Travel

  • Policy & Public Interest
      • Policy & Public Interest

      • Advocacy Group Opinion
      • Animal Welfare
      • Congressional & Presidential Campaigns
      • Corporate Social Responsibility
      • Domestic Policy
      • Economic News, Trends, Analysis
      • Education
      • Environmental
      • European Government
      • FDA Approval
      • Federal and State Legislation
      • Federal Executive Branch & Agency
      • Foreign Policy & International Affairs
      • Homeland Security
      • Labor & Union
      • Legal Issues
      • Natural Disasters
      • Not For Profit
      • Patent Law
      • Public Safety
      • Trade Policy
      • U.S. State Policy
      • View All Policy & Public Interest

  • People & Culture
      • People & Culture

      • Aboriginal, First Nations & Native American
      • African American
      • Asian American
      • Children
      • Diversity, Equity & Inclusion
      • Hispanic
      • Lesbian, Gay & Bisexual
      • Men's Interest
      • People with Disabilities
      • Religion
      • Senior Citizens
      • Veterans
      • Women
      • View All People & Culture

  • Hamburger menu
  • Cision PRWeb provides efficient communication tools to continuously engage with target audiences across multiple online channels
  • Create a Free Account
    • ALL CONTACT INFO
    • Contact Us


      11AM ET Sunday – 8PM ET Friday

  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR
  • News in Focus
    • Browse All News
    • Multimedia Gallery
  • Business & Money
    • Auto & Transportation
    • Business Technology
    • Entertain­ment & Media
    • Financial Services & Investing
    • General Business
  • Science & Tech
    • Consumer Technology
    • Energy & Natural Resources
    • Environ­ment
    • Heavy Industry & Manufacturing
    • Telecomm­unications
  • Lifestyle & Health
    • Consumer Products & Retail
    • Entertain­ment & Media
    • Health
    • Sports
    • Travel
  • Policy & Public Interest
  • People & Culture
    • People & Culture
  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR
  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR
  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR

St. Louis Fed’s Bullard Discusses the U.S. Macroeconomic Outlook
  • USA - English


News provided by

Federal Reserve Bank of St. Louis

Apr 09, 2017, 23:10 ET

Share this article

Share toX

Share this article

Share toX

Federal Reserve Bank of St. Louis President and CEO James Bullard
Federal Reserve Bank of St. Louis President and CEO James Bullard

Melbourne, Australia (PRWEB) April 09, 2017 -- Federal Reserve Bank of St. Louis President James Bullard addressed “The U.S. Macroeconomic Outlook” during Monday’s International Distinguished Lecture at the Australian Centre for Financial Studies.

During his presentation, Bullard shared his views on the state of the U.S. economy and how it affects his outlook for the policy rate (i.e., the U.S. federal funds rate target).

“The U.S. economy has arguably converged to a low-real-GDP-growth, low-safe-real-interest-rate regime,” he said, adding that this situation is unlikely to change dramatically in 2017. “Because of this, the Fed’s policy rate can remain relatively low while still keeping inflation and unemployment near goal values.” Regarding the impact of possible fiscal and regulatory policy changes in the U.S., he said that “the Fed can take a wait-and-see posture.”

In addition to the policy rate, Bullard also discussed the Fed’s $4.47 trillion balance sheet. He reiterated his view that now may be a good time for the Federal Open Market Committee (FOMC) to consider allowing the balance sheet to normalize by ending reinvestment. “Ending balance sheet reinvestment may allow for a more natural adjustment of rates across the yield curve as normalization proceeds,” he said.

Recent U.S. Economic Performance

In discussing the U.S. economy’s low-growth, low-rate regime, Bullard examined the slower pace of real GDP growth, labor market improvement and productivity growth in recent years. He also looked at several measures of inflation and at real rates of return on short-term government paper.

The Low-Growth Regime

Bullard said that real GDP growth, as measured from one year earlier, has averaged just 2.1 percent over the last seven years and that the last two years have shown very little change. “A natural conclusion is that the economy has converged upon a growth rate of about 2 percent,” he said. “These considerations make it seem unwise to forecast more rapid growth in 2017.”

Furthermore, he noted that some indications for growth in the first quarter are below 2 percent. “If the tracking estimates turn out to be correct, the economy will have to grow that much more rapidly during the last three quarters of 2017 to surpass 2 percent for the year as a whole,” he explained.

There is also the question of residual seasonality, he said, explaining how first-quarter real GDP growth in recent years has generally been lower than in other quarters, despite the underlying data being adjusted to remove seasonal effects. “The magnitude of this effect is debatable,” Bullard said, adding that, on balance, weather effects this year have not been particularly pronounced. “It may be better to use real GDP growth measured from one year earlier to gauge performance,” he noted.

Slowing Labor Market Improvement

Turning to the labor market, Bullard said, “Bottom line, labor market improvement has been slowing.” He described how over the last 18 months, the U.S. unemployment rate has declined only a few tenths of a percent. In addition, nonfarm payroll employment growth, when measured from one year earlier, stands at only 1.5 percent today, compared with 2.3 percent in February 2015. Finally, private hours growth, when measured from one year earlier, is just 1.4 percent today, compared with 3.4 percent in February 2015.

Low Productivity Growth

Bullard also looked at labor productivity growth, given that U.S. economic growth over the medium and longer term is driven by productivity trends as well as labor force trends. In the U.S., labor productivity has been growing at an average rate of only 0.4 percent since early 2013, compared with an average rate of 2.3 percent from 1995 to 2005. “Faster productivity growth is the surest path to more rapid real GDP growth in the U.S.,” he said.

Inflation Close to 2 Percent

Movements in inflation in recent years have been barely perceptible, Bullard noted, citing the Dallas Fed trimmed-mean inflation rate measured from a year earlier as an example. In addition, headline inflation measured from one year earlier (at 2.1 percent in February) has returned to the FOMC’s 2 percent target, and most other measures of inflation are also near 2 percent. Finally, he noted that inflation expectations are still somewhat low, but have been rising. The bottom line, he said, is that “inflation has essentially returned to 2 percent and is expected to remain there.”

The Low-Safe-Real-Rate Regime

In discussing the regime of low real rates of return on short-term government paper, Bullard said that it is a global phenomenon that has been many years in the making. “It seems unwise to rely on mean reversion to predict that the forces driving safe real rates to such low levels are likely to reverse anytime soon,” he said. “This then feeds through to the policy rate, which is also likely to remain low.”

Current U.S. Monetary Policy

Turning to U.S. monetary policy and policy rate projections, Bullard discussed why the St. Louis Fed’s view differs from the view underlying the median policy rate projections (“dots”) in the FOMC’s Summary of Economic Projections. He explained that the St. Louis Fed does not assume that the rate of productivity growth or the real rate of return on short-term government paper will return to historical averages.

“The median dots suggest that the real rate of return, in particular, will return to its 2001-2007 U.S. average, while the St. Louis Fed does not predict this,” he said. “This leads to a St. Louis Fed forecast of a relatively flat policy rate over the next two to three years, with some upside risk.”

He also discussed whether new fiscal and regulatory policies might move the U.S. into a higher growth regime. “The new fiscal and regulatory policies could impact productivity growth and therefore improve the pace of real GDP growth,” he said, adding that the Fed can wait to see how the new policies evolve.

The Fed’s Balance Sheet Policy

Now that the policy rate has been increased, Bullard said that the FOMC may be in a better position to allow reinvestment to end or to otherwise reduce the size of the balance sheet.

He noted that the current policy is distorting the yield curve. “The current FOMC policy is putting some upward pressure on the short end of the yield curve through actual and projected movements in the policy rate. At the same time, current policy is putting downward pressure on other portions of the yield curve by maintaining a $4.47 trillion balance sheet,” he explained. “A more natural normalization process would allow the entire yield curve to adjust appropriately as normalization proceeds.”

Permitting some adjustments to the balance sheet may also create balance-sheet “policy space,” Bullard said. “We should be allowing the balance sheet to normalize naturally now, during relatively good times, in case we are forced to resort to balance sheet policy in a future downturn.”

###

Headquartered in St. Louis, with branches in Little Rock, Louisville and Memphis, the Federal Reserve Bank of St. Louis serves the states that comprise the Federal Reserve’s Eighth District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi. The St. Louis Fed is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., comprise the Federal Reserve System. As the nation's central bank, the Federal Reserve System formulates U.S. monetary policy, regulates state-chartered member banks and bank holding companies, provides payment services to financial institutions and the U.S. government, and promotes financial literacy, economic education, and community development.

Adriene Dempsey, Federal Reserve Bank of St. Louis, http://www.stlouisfed.org, +1 314-444-7471, [email protected]

Modal title

Contact PRWeb

  • 11AM ET Sunday – 8PM ET Friday
  • Contact Us

About PRWeb

  • About PRWeb
  • Partners
  • Partnership Programs
  • Editorial Guidelines
  • Resources

Why PRWeb

  • Why PRWeb
  • How It Works
  • Who Uses It
  • Pricing

Accounts

  • Create a Free Account
  • Log in
  • Contact Us

Do not sell or share my personal information:

  • Submit via [email protected] 
  • Call Privacy toll-free: 877-297-8921

Contact Cision

Products

About

My Services
  • All News Releases
  • Online Member Center
  • ProfNet
Cision Distribution Helpline
888-776-0942
  • Legal
  • Site Map
  • RSS
  • Cookie Settings
Copyright © 2025 Cision US Inc.