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The U.S. economic outlook is improving rapidly and the emerging recovery from the Covid slump could be "long and durable," Philadelphia Fed President Patrick Harker said Tuesday.
A disappointing April employment report showing just 266,000 net new jobs were created last month, far fewer than expected, was "probably an outlier," he said.
"The underlying fundamentals of the economy look so strong," Harker said. "At this point, I anticipate the labor force returning to its pre-pandemic trend sometime next summer."
Harker says he's forecasting GDP growth of 7% this year and 3% next year.
"One of our contacts who owns a network of gas stations and convenience stores reported needing extra armored car runs during the week the latest round of stimulus checks arrived to keep up with demand at his ATMs," Harker said.
The Fed has kept interest rates near zero since March and vowed to keep buying USD120 billion per month in Treasury and mortgage bonds until the economy makes "substantial further progress" toward the Fed's policy goals. However, there is wide ranging debate within and outside the committee about when that threshold is likely to be reached.
"Economic data like employment, housing, and manufacturing figures came in stronger over the last couple of months than many of us — myself included — expected," Harker said. "And recent spending data have once again provided a reminder to never bet against the American consumer."