The Federal Reserve’s vice-chairman has pointed to weak labour force participation and a soft US housing recovery as two reasons for disappointing global growth, saying this could be a long-term phenomenon.
Stanley Fischer’s comments reflected continuing concern about the economy that has fuelled debate over whether the Fed should move sooner than expected to raise interest rates, despite solid job growth and strong gross domestic product expansion in the US.
“This pattern of disappointment and downward revision [in growth] sets up the first, and the basic, challenge on the list of issues policy makers face in moving ahead: restoring growth, if that is possible,” Mr Fischer said on Monday in a speech in Stockholm. “It is also possible that the underperformance reflects a more structural longer-term shift in the global economy, with less growth in underlying supply factors.”