2002 News Releases

For immediate release:
April 11, 2002

Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org

McTeer: Aggressive Monetary Policy and Productivity Fueling Economy

DALLAS—The September 11 tragedy ended the longest U.S. expansion in history at exactly 10 years, but the year still ended on a positive economic note, writes Bob McTeer, president and CEO of the Federal Reserve Bank of Dallas, in his introduction to the Bank’s 2001 annual report. Growth resumed in the fourth quarter, and GDP was positive for the year.

McTeer rejects the notion that monetary policy has been ineffective and notes that the mild recession and early recovery resulted largely from the "most aggressive easing of monetary policy in history." He adds, however, that although the recovery has begun, its strength and durability remain uncertain.

McTeer also credits continuing productivity growth for present economic improvements and cites it as the main hope for a return to vigorous growth.

"Even during the recession, productivity continued to grow nicely, an encouraging sign for the future. Productivity increased about 2 percent last year on average and at a rate exceeding 5 percent in the fourth quarter," he writes.

McTeer, a well-known New Economy advocate, suggests that if the new paradigm was lost—which he doubts—he expects it to be regained. He says that biotech is the great hope of the future and will likely play the same role in this decade that information and communications technology played in the last.

The Bank’s 2001 annual report essay, "Taking Stock in America: Resiliency, Redundancy and Recovery in the U.S. Economy," focuses on America’s ability to endure and recover from setbacks.

McTeer’s views and the essay can be found on the Dallas Fed web site, http://www.dallasfed.org/fed/annual/2001/index.html.

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