The US economy will slow in the second half but return to more normal growth in the first half of 2011, James Bullard, president of the St. Louis Federal Reserve, told CNBC Thursday.
“The consensus is developing in the forecast community that we’ve got a slower economy in second half of this year,” said Bullard, who is known to be an outspoken hawk on monetary policy. “But we will pick up in 2011, probably back to trend growth, or even better.”
He expects unemployment will fall next year and consumer and business spending to gain momentum.
Bullard said that though the US had a string of poor economy reports in July and August, sluggishness is typical when an economy is rebounding from a serious recession.
“We are in a rough patch in our recovery,” he added. “It wouldn’t be unusual to have a slowdown, then pick up.”
He reiterated the Fed's recent statement that the central bank will take further steps to boost the economy if growth continues to worsen.
The Fed president also said the US government needs to create more certainty so businesses understand what’s ahead in tax increases, healthcare costs and financial regulation.
“When you lay out a plan and say here’s what it’s going to look like, then you get better outcomes today and it [manages] those expectations,” added Bullard.
Bullard reiterated that he opposes President Obama's pledge to let the Bush tax cuts for the wealthiest Americans expire at the end of this year.
“I don’t think it’s a good idea to raise any taxes,” he added, “when you’re trying to get a recovery going.”