Philly Fed President Charles Plosser gave a modestly upbeat assessment of the economic outlook while acknowledging there are still risks.
"The first estimate of first-quarter GDP growth was reported last week as 2.2 percent. This number was slightly less than many forecasters anticipated, but it was in line with my forecast of moderate growth that will strengthen over time."
"I anticipate that we will see moderate year-over-year growth of about 3 percent in 2012 and 2013. That outlook puts me in a slightly more optimistic camp than some forecasters. "
He points to manufacturing as the bright spot in the economy with the consumer sector also being a positive.
"Growth in manufacturing has proven to be a bright spot for the economy over the last six to nine months, and it continues to be a reason for optimism going forward."
"Consumer spending, which accounts for about 70 percent of the nation’s GDP, also continues to improve, as the drag from household deleveraging lessens."
Plosser does not see much improvement in housing in the near term.
"On the housing front, I expect to see stabilization and maybe slight improvement in 2012. Yet, as the old real estate saying goes: “Location, location, location!” Whereas some regions saw a tremendous build-up in residential real estate, followed by a sharp decline, other areas, including many parts of my region back east, saw neither the dramatic boom nor the tragic bust. At a national level, though, we must acknowledge that we entered the recession over-invested in residential real estate, and we are not likely to see a strong housing recovery until the surplus inventory of foreclosed and distressed properties declines."
The Philly Fed president sees only slow improvement in unemployment.
"Despite this gradual improvement, we cannot ignore the fact that there are still too many people unemployed. The U.S. lost 8.8 million jobs from the peak of employment in January 2008 to the trough in employment in February 2010. We have gained back 3.5 million lost jobs, or 40 percent, but it will take some time before we, once again, see a truly vibrant labor market."
Plosser see Europe as a continuing but modest risk to U.S. growth. The price of crude oil has diminished as a risk.
"I have come to believe that the European governments and their economies will muddle through this near-term crisis but at significant cost to the taxpayers all across the euro zone. Nevertheless, the turmoil has resulted in an economic slowdown in the euro zone that will likely cause a small drag on U.S. exports."
"The other risk facing the U.S. economy has been the rising cost of oil and gasoline. Oil prices have fallen from their recent highs, but they remain over $100 a barrel and gasoline is about $4 a gallon. However, unless the price of oil rises substantially from current levels, this is not likely to derail our recovery."