Inflation in the short term should not be a concern for the nation or Colorado, Mark Snead, the vice president and Denver Branch executive for the Federal Reserve Bank of Kansas City, told a Denver audience Tuesday.
Snead told the City Club of Denver that year-over-year inflation rates are close to 3 percent, and if energy is removed, the inflation rate is 2.3 percent.
“In terms of sustained, long-run increases in the overall price level, we aren ‘t there yet,” Snead said. “Inflation does not happen overnight — it is not a short-run phenomenon; it is a long-run phenomenon.
“So when we are looking at inflation, it is not a 2012 concern, and probably not a ’13 concern, but it is certainly a ’14, ’15, ’16 and beyond concern.”
Snead serves as the Kansas City Fed’s regional economist and the lead officer in
Colorado, Wyoming and northern New Mexico.
Snead said the country has had 10 consecutive quarters of economic expansion.
He said that in the last quarter, the economy expanded at an annual rate of 2.8 percent and on average has grown at about 2.5 percent.
Snead said 2.5 percent is the “normal growth rate.”
“The problem is that we had to throw everything we possibly had at it to achieve 2.5 percent growth,” he said. “It took everything we had in terms of a policy perspective to make this happen.”
As far as jobs, Snead said employment is growing about 1.1 percent to 1.2 percent annually.
“We are growing at 2.5 percent. We’ve got job growth at 1.1 to 1.2 percent. They are perfectly matched,” he said. “There is nothing out of sync.”
Snead said part of the current reduction of the U.S. labor force could be traced to an “incredible surge” of people into the workforce in the early 1990s through 2000. He said it pushed participation in the workforce to unprecedented levels.
“I would argue it was overheated participation (in the labor force) to begin with, so we’re coming back to normal,” Snead said.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com
