WASHINGTON -- The economy is poised for stronger growth than many analysts have predicted, the president of the Federal Reserve Bank of Richmond said Tuesday.
Stronger consumer demand, new business spending, growing housing activity, and increased exports will improve the economy at a faster pace than anticipated, said J. Alfred Broaddus, in a speech before the National Economists Club.
Gradual Improvement Seen
Many economists have forecast that growth in the gross domestic product will be 2.75% in the third quarter and move up to 3% by yearend.
"My guess is we will see slightly more growth than that," he said. "I have a strong sense that things are gradually getting better and the economy is on increasingly strong footing."
Lower long-term rates are the economy's greatest source of strength, the Fed president said, and they could decline even further. The Fed needs to monitor upward pressure on inflation, which is running at an annualized rate of about 3%, Mr. Broaddus said. "I believe conditions are ripe to move it down a little bit further," he said.
Mr. Broaddus said the small-business outlook in the Southeast is improving as well, with fewer owners complaining that they can't get credit.