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Cleveland must be a pretty depressing place these days.
Sandra Pianalto told a group of executives in Bonita Springs that there remain significant headwinds to an economic recovery. Pianalto is the president and chief executive officer of the Federal Reserve Bank in Cleveland and a voting member of the Federal Open Market Committee of the Federal Reserve Board that sets short-term interest rates.
These headwinds include: two million residential foreclosures, financing problems with $1.2 trillion worth of commercial real estate, persistently high unemployment above 9% until the middle of next year and increased personal savings by super-cautious consumers and businesses reluctant to spend.
“Our journey to full economic recovery is just beginning,” she told executives gathered at the Bonita Springs Area Chamber of Commerce's annual Market Pulse event on March 25.
What's more, uncertainty about health care and taxes is forcing businesses to postpone capital spending, Pianalto says. “Many business owners are just trying to hold on,” she says.
“It's not a Tony Robbins session,” quipped Nigel Fullick, seeking to inject some levity in Pianalto's grim assessment. Fullick was the committee chairman for the event who introduced Pianalto.
Fortunately, Pianalto says inflation remains subdued. In fact, she says, 40% of the goods in the consumer-price index have fallen in the last six months.
Repeating a common refrain, Pianalto says short-term interest rates will remain low “for an extended period of time.” Still, she warns without elaborating, “there's going to be a time when we raise interest rates.”
But if Cleveland has anything to say about it, it isn't going to be soon.
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