PHILADELPHIA Oct 13 The U.S. economy is doing
"pretty well" and has a strong labor market, Philadelphia Fed
President Patrick Harker said on Thursday.
Harker, who does not have a vote on monetary policy this
year but will in 2017, did not say how close the U.S. central
bank might be to raising interest rates.
But he said the U.S. labor market had largely recovered from
the 2007-09 recession even if it faces longer-term challenges
due to the drop in the share of Americans who want to work.
"Despite frequent talk about a sub-par economy, we're
actually doing pretty well," Harker said in prepared remarks
before the World Affairs Council in Philadelphia.
Harker said on Sept 29 he thought the economy would likely
warrant an interest rate increase at its last policy meeting of
the year in December. The Fed last raised rates in December 2015
and minutes from its most recent meeting in September showed
several voting policymakers judged a rate hike would be
warranted "relatively soon" if the U.S. economy continued to
The Fed also has a policy meeting scheduled for Nov. 1-2,
but investors see little chance of a hike then given its
proximity to the Nov. 8 U.S. presidential election. Harker said
the Fed was not affected by election cycles and politics never
plays a role in its discussions.
"The fact is that we have a strong labor market," he said on
Thursday, pointing to the country's 5 percent jobless rate.
But he also noted that future economic growth could be
weighed down by the long-term drop in America's so-called labor
force participation rate, which is the share of the working-age
population with a job or looking for one.
It could also make living standards advance at a slower pace
by slowing growth in the average amount of output each worker
produces per hour, he said. That makes for a less dynamic
economy and suggests the Fed will have to keep interest rates
lower on average than in the past.
"That's important because it gives us less room to
maneuver," he said.
(Reporting by Jason Lange; Editing by Chizu Nomiyama)