Federal Reserve Bank of Philadephia Patrick Harker said the Delaware and national economies are perking along.
Harker, the former President of the University of Delaware, spoke at a Wednesday meeting of the Commercial-Industrial Realty Council in Delaware.
In his prepared remarks, Harker started his speech on a light note, expressing disappointment that fall’s Punkin Chunkin event moved to Illinois from Sussex County.
He went on to caution that an economic slowdown will occur but cautioned against reading too much into gloom and doom predictions that will accompany any dip.
Harker issued the usual disclaimer that his views do not necessarily reflect those of the Federal Reserve. Harker does not sit on the Open Market Committee that sets interest rates but does participate in discussions leading up to a vote.
“The headline on my views these days is: not much news. Despite spirited conversations on all aspects of the economy, my outlook has stayed relatively steady,” Harker stated.
Harker sees unemployment staying below the 4 percent mark for the next couple of years, with inflation remaining in check.
He sees a two percent-plus economic growth rate in 2019, falling to about two percent in 2020.
Harker offered his view that monetary policy from the Fed has a limited impact.
“Meaningful change to the nation’s growth trajectory requires fiscal policy. The Fed can create the conditions for growth to take root, but for it to flourish, it needs the nourishment of legislative action,” he stated.
Harker acknowledged that headwinds exist, that include “trade and international developments, including slowing overall global growth. And while the consumer has been the hero of this year’s growth story, that can’t be the single engine. We need business investment to drive the economy as well.”
Harker noted that housing market figures have been improving in recent months. Low mortgage rates in recent months have helped. Residential delinquency rates continue to fall. The recovery of the housing market “has taken a bit longer to reach our local markets,” Harker stated.
The Philly Fed chief’s personal view is that the Fed to hold interest rates steady for a while.
“I am not a voting member on the FOMC this year, but I held this same view regarding the last two cuts, Harker stated. “I would have preferred to hold firm. And while it wasn’t my preference, it does act as a good reminder that monetary policy in the United States is a deliberative process. Every region of the country is represented around the table, and policy made by a plurality of views and opinions will necessarily be thoughtful and temperate.”
Harker’s view runs counter to President Trump’s claim that the lack of more aggressive rate cuts has limited economic growth.