WASHINGTON (Reuters) – The U.S. economy is likely to continue growing at an above-trend pace for at least the next 18 months, and households are likely to continue spending as the influence of the pandemic fades, St. Louis Fed president James Bullard said on Tuesday.
Growth in the range of 2.5% to 3% is “fast compared to the long run potential rate of growth for us,” which may be just below 2%, Bullard said in comments that appeared to downplay possible recession risks from tighter Fed monetary policy.
“That’s where we are…U.S. labor markets are super strong…Household consumption is expected to hold through this year.”
People “want to put the pandemic behind them and they have lots of plans about spending,” Bullard said in comments to an energy investor conference.
Retail sales rose faster than expected in April and were revised higher for March, showing U.S. consumers sloughing off the impact of the highest inflation in 40 years, and showing no signs of cutting back in the face of rising interest rates.
Bullard said Fed plans to continue raising the target federal funds rate by half a percentage point in coming meetings remained “a good plan” to bring inflation down, and said the Fed hoped that could be accomplished with “the least amount of disruption we can get.”
(Reporting by Howard Schneider; Editing by Kirsten Donovan)