Policy-makers, Consumers Differ on U.S. Economy

The U.S. economy is a glass at least half full, analysts and policy-makers say, and most discount worries growth will slow down too much.

But energy prices are rising and wages are under pressure, leading some economists to believe that consumers are taking a different view.

The U.S. economy “in 2004 and in 2003 was really driven by house prices,” which in turn was driving consumer spending, former Federal Reserve Governor Wayne Angell said, and now the “trend growth in consumer spending will be lower.”

Federal Reserve Vice Chairman Roger Ferguson said last week “that in March, possibly, the economy was in a bit of a soft patch.” San Francisco Fed Bank President Janet Yellen echoed that last week, blaming lofty energy prices for a “soft spot.”

However, Ferguson also noted consensus forecasts still peg economic growth somewhere around potential. The economy’s potential growth rate, fast enough to boost employment without sparking inflation, is believed to be around 3.5 percent to 4 percent.

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