Fed economist sees GDP recovery, unemployment lingering

Sep 30, 2009 | 11:46 AM | Corinna Petry

The nation's gross domestic product (GDP) growth will be weak through the rest of 2009 but then move closer to its pre-recession trend next year, according to the senior economist for the Federal Reserve Bank of Chicago.

The tightness of credit has had the effect of delaying growth but it's not necessarily a bad thing for the long term, William A. Strauss said at AMM's Infrastructure and Steel Conference in Chicago.

"Consumers have gotten a new religion," Strauss said, referring to the household savings rate, which has steadily been rising in recent months after sitting in negative territory during the mid-2000s. Fed up with their own high rates of debt and "locked out" of credit to buy homes and cars, consumers have become conservative about spending, Strauss said, adding he expects the savings trend to last five years. ....

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