SINGAPORE, Oct 8 (Reuters) - St. Louis Federal Reserve Bank President James Bullard said on Monday that the United States needed productivity gains to maintain its current growth rates, which could be achieved through investments and technology.
The U.S. Federal Reserve, which last month raised interest rates for the third time this year, sees the U.S. economy growing at a faster-than-expected 3.1 percent this year and continuing to expand moderately for at least three more years.
U.S. worker productivity rose at its fastest pace in more than three years in the second quarter, data last month confirmed, but the trend in productivity growth remained moderate.
“The U.S. will likely need faster productivity growth in order to maintain current real GDP growth rates,” Bullard, a non-voting member of the U.S. Federal Reserve’s policymaking committee, said in a speech in Singapore.
“This is a possibility if U.S. investment improves and technological diffusion begins to improve business processes at a faster pace.”
Bullard said a switch to higher labour productivity growth, as seen between the late 1990s and the mid-2000s, would raise the U.S. potential growth rate to 3.4 percent. (Reporting by John Geddie and Aradhana Aravindan; Editing by Simon Cameron-Moore)