Former Federal Reserve Vice Chairman Donald Kohn said impediments to economic growth are fading and the recovery should quicken next year.
“A number of those headwinds are abating,” Kohn said today at a meeting of the Urban Land Institute in Washington. “We should see households spending” an increasing part of “their income instead of a decreasing part.”
Retail sales in the U.S. climbed more than forecast in September, easing concern that unemployment near a 26-year high will bring the recovery to a halt. Purchases rose 0.6 percent following a 0.7 percent gain in August that was larger than previously estimated, according to Commerce Department data issued today in Washington.
Kohn said the U.S. probably won’t relapse into recession and face a period of deflation, or a broad-based decline in prices. “Not a deflation, just very low inflation,” he said. “Not a recession, but sluggish growth.”
“My view is that deflation is a small risk, very small risk right now,” he said.
Kohn, 67, retired Sept. 1 after serving as the top monetary-policy strategist for former Fed Chairman Alan Greenspan and as Chairman Ben S. Bernanke’s chief lieutenant, guiding central bank efforts to stem the financial crisis, including unprecedented emergency credit programs.
Kohn is now a senior fellow at the Brookings Institution, a research organization based in Washington.
© Copyright 2017 Bloomberg News. All rights reserved.