The economy, in Colorado and nationally, is poised to continue growing this year, as a recent slide in energy prices has helped curb inflation and given people more spending money, an executive with the Federal Reserve said Wednesday.
But the strain of the nation’s lackluster housing market and an increasingly tight labor market, which is starting to push wages higher, could crimp economic growth in 2007, said Tom Hoenig, president of the Federal Reserve Bank of Kansas City.
“As I look at the data today, including here in Colorado, we see the housing market stabilizing and the economy continuing to grow,” said Hoenig, who predicted that the nation’s gross domestic product may grow by more than 3 percent this year.
Hoenig delivered that message to a group of bankers, legislators and other state officials during a presentation at the Colorado Capitol.
Those in attendance included Gov. Bill Ritter, Attorney General John Suthers and Senate President Joan Fitz-Gerald.
Hoenig, whose bank oversees seven states including Colorado, Kansas and Nebraska, is a member of the Federal Open Market Committee. That group is in charge of setting the nation’s interest rates.
When asked if the Fed would soon lower interest rates in response to the economy’s recent slowdown, Hoenig declined to tip his hand.
More broadly, Hoenig said job growth in the region and nationwide continues to be robust. He said unemployment, at a relatively low 4.6 percent in 2006, could move slightly higher next year.
He noted that the economy would be helped if core inflation, which excludes energy and food prices, continued its recent downward trend.
However, Hoenig said worker wages are starting to increase, which could renew fears of unwanted inflation.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
