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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Even at the Fed, the future isn’t clear

IMAGE DISTRIBUTED FOR UCLA ANDERSON SCHOOL OF MANAGEMENT - John Williams, President and CEO of Federal Reserve Bank of San Francisco, speaks at the September 2015 UCLA Anderson Forecast at the UCLA campus on Monday, Sept. 28, 2015, in Los Angeles. (Photo by Matt Sayles/Invision for UCLA Anderson School of Management/AP Images) ORG XMIT: INVL (Matt Sayles / Invision for UCLA Anderson School of Management)

One of the nation’s most powerful economists, a man charged with helping to steer monetary policy in the United States, visited Spokane this week and told an audience, “We recognize, with a big dose of humility, that we are not that good at forecasting the future.”

John C. Williams, the president and chief executive officer of the San Francisco branch of the Federal Reserve Bank, was responding to a question from the audience, not commenting on the Fed’s abilities.

But he said he’s learned over a long career that no one should assume things are going to stay the same. For instance, Williams said, there are a lot of signs that global growth is going to be slower than it has been in the last few decades. Population growth will almost certainly be slower, and interest rates may be lower.

“What’s the new normal for interest rates?” he said. For now, the Fed, the nation’s central bank, left a key interest rate unchanged at its last meeting. Minutes from that meeting, which are closely scrutinized by economists, financial analysts and market specialists for hints to the Fed’s future actions, were released shortly before Williams’ remarks to a meeting co-sponsored by Greater Spokane Inc.

Williams repeated his expectation that the economy will continue to grow into next year, that the national unemployment rate will fall to under 5 percent later this year or early next year, and that the Fed would start raising interest rates.

He said, in answer to another question, that it’s a “huge issue” for America that the median income has stagnated. “Historically when the economy got better, all boats got lifted,” he said. But technological changes “have led to the hollowing out of middle-paying jobs.”

The best thing policy makers can do to address stagnant wages is invest in education and job training, Williams said.