The US economy is expected to grow by 2.5 percent in 2013, improving to 3.5 percent growth in 2014, a top Federal Reserve Bank official, Charles Evans, said yesterday.Evans also forecast the US unemployment rate would be 7.4 percent this year, easing to about 7 percent in 2014.“One good indicator of labor market improvement would be if we saw payroll employment increase by 200,000 each month for a number of months. We’ve been averaging about 150,000, but its been very uneven ... we need a higher pace of employment growth and less volatility in that pace,” the Chicago Federal Reserve Bank president said.The creation of one million jobs over six months would be a “substantive” improvement, but bringing unemployment down to the key level of 6.5 percent was likely to take much longer, probably until mid-2015, he said, speaking at the Asian Financial Forum in Hong Kong.The US Federal Reserve’s decision last year to tie monetary policy to specific economic conditions should help boost the recovery without letting inflation take hold, said Evans, a chief architect of the policy.It also provides additional accommodation by assuring markets that rates will remain low even after the economy perks up, he said.“Given more explicit conditionality, markets can be more confident that we will provide the monetary accommodation necessary to close the large resource gaps that currently exist,” he said. “Additionally, the public can be more certain that we will not wait too long to tighten if inflation were to become a substantial concern.”
