BATON ROUGE, La. -- Leaving aside the possible effects of fiscal policy, the U.S. economy is poised for continued moderate growth, according to Alfred Broaddus, president of the Federal Reserve Bank of Richmond.
Consumer spending slowed in the first quarter a "buying rampage" in late 1992, Mr. Broaddus told bankers attending the Graduate School of Banking of the South at Louisiana State University.
Car sales and other spending trends picked up in the second quarter, he added.
Spending on Equipment
Business spending on equipment is favorable and "there are at least some signs of economic revival" in major export markets. particularly Britain, Canada, and Germany, Mr. Broaddus said.
The big unknown is the effect on the U.S. economy of the Clinton administration's economic package, Mr. Broaddus said.
The public seems most concerned about the budget package's heavy reliance on tax increases and is uncertain the plan will clearly and permanently reduce the deficit, the Fed official said.
Regardless of the fiscal policy, Federal Reserve officials will watch the economy with an eye toward keeping prices stable.
"Our objective is to eliminate inflation as a practical force in the business and economic decisions of the American economy, not immediately but over a reasonable period of time, and restore stable pricing levels like we enjoyed back in the middle of the 1950s and early 1960s," Mr. Broaddus said.
Also speaking at the LSU program, Federal Reserve Governor Susan Phillips said the Clinton administration is certain to keep community reinvestment and fair lending issues at center stage.
She pointed out that all federal banking regulators have alerted lenders of an increased committment to Community Reinvestment Act Enforcement.
Meanwhile, data gathered under the Home Mortgage Disclosure Act for 1990 and 1991 revealed patterns of discrimination, and 1992 data are currently being compiled.
"There will be increased emphasis on the use of HMDA data in the examination process," Ms. Phillips predicted.
Working with Existing Banks
Ms. Phillips said the Clinton administration is putting the finishing touches on its community banking initiative, which is likely to focus on working through existing banks rather than creating a new system of community investment banks.
An entire new network of community lenders would have proved overwhelming and destined to "lots of false starts," said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, who participated in the discussion with Ms. Phillips.
"My own impression is that as they have gotten into and studied what's actually going on in the banking system, I think they've seen there is a good deal of innovation and effort out there already and the thing to do is to try and build on what is there," Ms. Phillips said.