The president of two regional Federal Reserve Banks said this week that they expect an economic recovery to set in by the middle of 1992.
Speaking in their respective districts, Edward Boehne of the Philadelphia Fed and Robert McTeer of the Dallas bank were cautiously optimistic and supported the central bank's current interest rate policies.
Mr. McTeer, in San Antonio, firmly stated that the economy is poised for a "moderate recovery" from its current stagnation within a few months.
'Hard to Be More Specific'
Mr. Boehne, said the "tentative" recovery has stalled but he "expects to see a recovery by the middle of 1992. It's hard to be more specific," he added.
Their pointing to mid-1992 corresponded with remarks on Tuesday by Federal Reserve Vice Chairman David Mullins, who projected a return to a 2.5% to 3% growth pace by late spring or early summer.
Mr. McTeer held out the possibility of further easing of interest rates by the Federal Open Market Committee, the policy-setting body onto which he will rotate as a voting member in 1993.
"There has been a lot of easing by the Fed that is still working its way through the system," Mr. McTeer said. "If that proves insufficient, there probably will be more easing."
Massive Debt an Obstacle
He said the recovery began in May, lost most of its steam in August and September, and has since been "moving sideways or up very slightly."
The Dallas Fed chief blamed the recession on the economy's massive debt burden and said the so-called credit crunch will last as long as businesses and consumers struggle to balance their books and make the debt more manageable.
Mr. McTeer has headed the Dallas bank since February and has been one of the lower-profile Fed presidents.
Mr. Boehne, head of the Philadelphia bank since 1981 and considered a moderate, consensus FOMC voter in his two recent terms, expressed some fear of the possibility of a possible double-dip recession.
"Whether we go back into a recession or it's just a temporary stalling, I think is just uncertain at this point," he said.
"We want, of course, to provide sufficient stimulus to help build a solid recovery. But we also want a substantial expansion, not the kind of boom-bust cycle that overstimulation can cause."