The president of the Minneapolis Federal Reserve Bank, Narayana Kocherlakota, told Twin Cities CEOs Tuesday that the economy is recovering, but he warned the recovery won't be very robust.
Kocherlakota predicted the gross domestic product will grow and unemployment will fall in the next two years, but not rapidly. He said he expectes the nation's gross domestic product would rise at about a 3 percent annual rate while unemployment will remain stubbornly high.
"Unemployment has fallen somewhat, but the forecasts remain uniformly troubling. It's notoriously slow to recover as a variable and has been especially slow to decline after the last two, milder recessions," he said. "I would be highly surprised if unemployment were below nine percent by the end of 2010 or below eight percent by the end of 2011."
On the matter of financial industry regulation, Kocherlakota argued Congress would be wrong to limit the Feds authority to supervise banks. He said it is critical for the Fed to retain its supervision of the nation's banks to guard against future financial crises.