Feb 28 Despite recent signs of a possible slowdown, the growth story for the U.S economy remains intact, top Federal Reserve officials said on Friday, suggesting they will continue to support reductions in the Fed's massive bond-buying program.
Recent bad weather in large portions of the United States is having an impact on economic activity, but that is no reason for less optimism about economic prospects for the rest of the year, St. Louis Federal Reserve President James Bullard told CNBC television on Friday.
His remarks came as the U.S. government slashed its estimate for fourth-quarter growth as consumer spending and exports were less robust than initially thought, suggesting some loss of momentum heading into 2014.
The revised estimate puts fourth-quarter growth at an annual rate of 2.4 percent, down from an earlier estimate of 3.2 percent. First-quarter data has also come in weaker than expected, as unusually cold weather took a toll on retail sales, housing and other metrics of growth.
Still, even if the recent spate of soft data is entirely unrelated to weather, Bullard said he remains optimistic.
"I'd still project that 2014 would have stronger GDP growth than 2013 did and I'd still project that inflation would come back to target," he said.
Charles Plosser, the hawkish president of the Federal Reserve Bank of Philadelphia, concurred in nearly simultaneous remarks on another news channel.
"The data is very noisy right now, extremely noisy with the weather and other things," Plosser said in an interview on Bloomberg News. "We have to be a little patient."
Plosser said he was optimistic about the nation's turnaround and said the economy is "in a firmer position than it's been in a number of years." He also reiterated forecasts, saying he sees close to 3 percent growth for 2014.
"We're going to have a sort of steady pace of growth going forward," he told Bloomberg.
After more than five years of super-easy monetary policy in the wake of the 2007-2009 recession, the Fed is taking the first small steps toward a more normal interest-rate environment. It trimmed its bond buying program by $10 billion in each of the past two months, and it expects to raise interest rates some time next year as long as the economy continues to improve.
Though the views of both Bullard and Plosser are sometimes at odds with those at the core of the Fed's policy-making decisions, their comments on Friday appeared to reflect the dominant line of thinking at the Fed.
On Thursday, new Fed Chair Janet Yellen attributed much of the recent weak economic data to bad weather and suggested that only a significant change in the economic outlook would drive the Fed to reconsider its plan to wind-down its massive bond-buying program this year.
Dallas Fed President Richard Fisher, speaking in Zurich, wholeheartedly embraced that plan.
"As soon as feasible, the Federal Reserve should stop large-scale asset purchases entirely," said Fisher, who has a vote on the Fed's policy panel this year.
The Texan is one of the most outspoken opponents of the current round of bond buying, which has swollen the Fed's balance sheet to more than $4 trillion.