Federal Reserve economist reports growing economy with challenges

(RIVERSIDE—Oct. 10, 2012) "Without further policy accommodations in the U.S., economic growth might not be strong enough to generate sustained improvement," said Gary C. Zimmerman, senior economist at the Federal Reserve Bank of San Francisco. "Risks include what will happen with federal spending and the situation in Europe."

Zimmerman spoke on the topic "Outlook for the U.S. Economy" to a standing room-only audience Tuesday at California Baptist University during the School of Business' Innovative Speaker Series.

He explained that the U.S. is headed toward a "fiscal cliff," where federal spending and tax increases could put the country in a period of inflation. In addition, economic weakness in Europe and slower than expected economic growth in China and Asia pose a risk to U.S. exports. Approximately 22 percent of U.S. exports go to Europe, he said.

Zimmerman reported the U.S. economy is growing moderately with the unemployment rate down slightly to 7.8 percent, although recent economic indicators remain relatively weak.

"The economy is creating more jobs than we thought," he said. "In addition, house prices appear to finally be stabilizing and/or rebounding as policy actions support housing."

One such action is to keep federal lending rates down, which should continue at least until mid-2015, according to Federal Reserve System predictions.

The second event in the CBU School of Business Innovative Speakers Series, "The Voices of Business," will feature a panel of business leaders on Oct. 29. The event series is free and open to the public.

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Photo by Leslie Mondragon