Speaking on the country’s economic outlook and monetary policy at the Economic Leadership Forum in Somerset, New Jersey, Federal Reserve Bank of New York President Bill Dudley said the U.S. economy has its strengths and weaknesses—but he expects household formation to receive a boost in 2016.
“Housing starts are still well below the rate consistent with the nation’s population growth rate, and the fundamentals of housing demand remain positive,” Dudley said. “Rising employment is likely to boost the household formation rate and low mortgage interest rates should keep housing relatively affordable, despite the ongoing recovery in home prices.”
Dudley pointed to the moderate expansion of consumption and housing activity as strengths for the economy, while pointing to weak GDP growth in the fourth quarter as a negative—though the weak Q4 GDP growth should be weighed against the evident strength of the labor market, he said.
“I continue to expect that the economy will expand at a pace slightly above its long-term trend in 2016,” Dudley said. “In other words, I anticipate sufficient economic strength to push the unemployment rate down a bit further and to more fully utilize the nation’s labor resources.”