There is new information this week from the Chair of the Minneapolis Federal Reserve on what he predicts is ahead for the economy in Minnesota. He says lost wealth continues to slow the housing recovery and warns about long-term employment weaknesses and inflation risk.
Finance & Commerce just wrote:
Job gains will remain weak for several more years because of all the wealth that U.S. households lost after 2008, Minneapolis Federal Reserve Bank President Narayana Kocherlakota said Tuesday.
Besides cutbacks in consumer spending that lowered demand for workers, the loss of wealth meant less startup capital to launch the small businesses that have created jobs coming out of previous recessions, he said at a press conference.
Still, Kocherlakota expects the modest economic recovery to continue, predicting gross domestic product (GDP) growth of 2.5 percent to 3 percent in each of the next two years. That’s a slight pickup from 2011’s 1.6 percent gain.
He also predicted U.S. unemployment would decline from its current 8.3 percent rate to 7.7 percent at the end of 2012 and 7 percent at the end of 2013.
You can read the entire article from Finance & Commerce here.
Here is Kocherlakota’s U.S. unemployment forecast:
- Current: 8.3%
- End of 2012: 7.7%
- End of 2013: 7.0%
Source: Minneapolis Federal Reserve
If you’d like to listen to Kocherlakota’s entire speech – listen online here.
As you know, consumers who don’t feel secure in their employment or have employment gaps will most likely not be looking to buy a home. Confidence is key in helping the housing market continue its recovery.
What do you think will be the biggest barrier to lower unemployment in Minnesota?
The Minnesota Association of REALTORS® is the largest professional trade association in the state with more than 19,000 members who are active in all aspects of the real estate industry.