For immediate release: April 11, 2002
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 Bankâ??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 lostâ??which he doubtsâ??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 Bankâ??s 2001 annual report essay, "Taking Stock in America: Resiliency, Redundancy and Recovery in the U.S. Economy," focuses on Americaâ??s ability to endure and recover from setbacks.
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