Fed’s Dudley Sees Improving Global Economy Helping U.S.Caroline Salas Gage
Federal Reserve Bank of New York President William C. Dudley said the international economy is “gradually improving” in a trend that benefits U.S. growth.
“Things aren’t perfect but I think that things are definitely improving and that will be helpful for the U.S. outlook,” Dudley said today in response to audience questions after a speech in New York. “If the rest of the world gets healthier” then demand will rise for U.S. goods and services.
The U.S. economy stalled last quarter because of what the Federal Open Market Committee this week called “transitory factors,” with gross domestic product shrinking at an annual rate of 0.1 percent. The policy-setting FOMC said in a statement it will continue buying securities at a pace of $85 billion a month to boost economic growth and help create jobs.
Hiring in the U.S. rose last month after accelerating more than previously estimated at the end of 2012, evidence the labor market was making progress even as lawmakers quarreled over the federal budget.
Payrolls rose 157,000 following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed today. The revisions added a total of 127,000 jobs to the employment count in November and December. The jobless rate increased to 7.9 percent from 7.8 percent.
U.S. stocks rose, after the best start to a year for the Standard & Poor’s 500 Index since 1997, on the labor market report. The S&P 500 gained 0.6 percent to 1,506.31 at 9:43 a.m. in New York. Yields on 10-year Treasuries fell five basis points, or 0.05 percentage point, to 1.93 percent.
The International Monetary Fund last month cut its global growth forecast and now projects a second year of contraction in the euro region as progress in battling Europe’s debt crisis fails to produce an economic recovery. The world economy will expand 3.5 percent this year, less than the 3.6 percent forecast in October, the Washington-based IMF said on Jan. 23 in an update of its World Economic Outlook.
In Europe, “the situation is considerably brighter” as political support for “getting budgets in order” is holding up, the European Central Bank has “provided a credible backstop,” and it’s “very clear” countries want to preserve the European Union, Dudley said.
Growth in China is also “reaccelerating” after showing signs of a “significant slowing” that raised concerns about a property bubble, he said.