The economy has hit a soft patch, according to New York Federal Reserve Bank President William Dudley, with 'disappointing” economic growth so far this year, but the woes should only be “transitory.”
Gas and food price spikes, combined with supply disruptions from the earthquake and tsunami in Japan, and severe weather and flooding in parts of the United States were major contributors to economic softness.
“All three suggest that the soft patch may not persist,” Dudley told the Brooklyn Chamber of Commerce Friday, according to prepared remarks released by the Fed. “However, we continue to monitor the data for signs of more persistent weakness, whether related to the interaction of housing and consumption or some other factor.”
The high prices for gas and food caused a slowdown in real consumption growth and hobbled consumer confidence.
Dudley suggested that second quarter growth “will also be subpar.”
On a positive note, “many fundamentals have improved since last year. In particular: Financial conditions have improved, albeit gradually, which makes it easier for larger, well-established firms to borrow and invest.”
And, despite a poor May showing, the labor market seems “more solid” than a year ago.
“Consequently, I anticipate that economic growth will pick up enough in the second half of 2011 to sustain a moderate economic recovery,” Dudley said.
