James Bullard, president of the St. Louis Federal Reserve Bank, said Friday that the country's economy may have actually shrunk in the first quarter by about 0.5 percent on an annualized basis, but indications are that it will average more than 3 percent growth for the rest of the year.
Bullard also told the annual convention of the Arkansas Bankers Association at the Statehouse Convention Center in Little Rock that the Fed "is much closer to its policy goals than it has been in the past five years."
Those goals are 5.4 percent unemployment and 2 percent inflation.
Saying he is more optimistic than others on the Fed's Open Market Committee, he expects the goals to be achieved by late in the first quarter of 2014.
Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock, attended Bullard's presentation and said it reflected the more optimistic end of the spectrum.
Bullard sits on the committee, which sets monetary policy such as the so-called quantitative easing designed to stimulate the economy by increasing the supply of money and lowering interest rates.
The country fell into a recession in December 2007.
The federal government began taking extraordinary steps, including the Bush administration's $700 billion Troubled Asset Relief Program for banks and eventually bailouts for General Motors and Chrysler.
The recession officially ended June 2009, but the nation's unemployment rate hit 10 percent in October of that year.
It has worked its way down, hitting 6.3 percent in April of this year. The Arkansas rate in April fell to 6.6 percent from 6.9 percent in March, although the U.S. Bureau of Labor Statistics on Friday blamed the state's shrinking labor force for making the rate look better.
Bullard told the bankers that the gross domestic product is expected to rebound significantly in the second, third and fourth quarters, out-achieving the 2013 GDP growth of 2.6 percent in 2013.
"That was probably the most specifically upbeat portion of his talk," Pakko said. "He was very careful to say that that was the consensus of economic forecasters.
"He was citing the consensus that the first quarter was something of an anomaly."
Bullard told the media after the address that the "natural" rate of unemployment for the nation over the past 50 years had been in the "mid-5" percent range.
He said the national housing market had been "weaker than expected. We'll see how much of that has been weather-related as we get through the spring selling season."
Sales of previously owned homes in the U.S. market slipped in March to their lowest level since July 2012 because of rising prices and short supply, according to the National Association of Realtors. Previously owned homes comprise about 90 percent of the housing market.
Sales of new homes in the nation in March fell to their lowest pace since the summer of 2013.
Arkansas home sales in March were unchanged from the same month last year, with the average home price dropping 4.7 percent, according to the Arkansas Realtors Association, which reports on transactions in 43 of the state's 75 counties and includes new and previously owned homes.Business on 05/17/2014