WASHINGTON — Federal Reserve Bank of San Francisco president John Williams Wednesday night saw few economic positives in the near future and said slow, steady improvement will take several years to restore full employment.
Answering questions after a speech at his bank to economics professors, Williams acknowledged that low interest rates have not done their usual job of boosting housing, as has been well illustrated in his geographic region.
Overall, “the current quarter looks a little better” than the first quarter, he said, and the bank’s forecast is for a growth rate of “around 3%” for 2011, from fourth quarter to fourth quarter.
“The unemployment rate today is 9%, which is extraordinarily high,” he added. “With a 3% growth, we would expect unemployment to end the year around maybe 8.5%, which is still well above most estimates and our estimate of full employment.”
In fact, according to Williams, “I don’t see us getting to what we think of currently as full employment for several more years.”
The economy remains “in a deep hole,” he declared.
“The fundamental problem is we’re trying to dig out of this deep hole. Because of the financial crisis, because of, I think, a lack of confidence both in households and in businesses, a typical pattern after financial crisis is a very gradual, slow recovery,” Williams said.