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Fed official: U.S. economy finally back to normal

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NEW YORK — Congratulations, America. The economy is finally back to normal.

That’s what John Williams, the head of the Federal Reserve Bank of San Francisco, declared Wednesday.

“The data have spoken, and the message is clear: We’ve largely attained the hard-sought recovery we’ve been after for the past nine years,” Williams told the Forecasters Club, a gathering of economists, in New York. He dubbed it a “Goldilocks economy.”

Unemployment peaked at 10% after the Great Recession. Today it’s just 4.7%, a level Williams said constitutes “full employment” because there will always be some job seekers, even in a healthy economy. Inflation is also “nearing” the Fed’s goal of 2%, he said.

The Fed raised interest rates this month for only the third time since the financial crisis. The central bank is expected to raise rates two more times this year, but Williams hinted again that three more hikes might be appropriate in 2017.

He said Wednesday that the Fed is as close “as we’ve ever been” to achieving its goals of full employment and stable inflation.

Williams argued that it’s time for the Fed — and Washington — to shift from obsessing about “How do we achieve a sustained recovery?” and focus on “How do we sustain the recovery we’ve achieved?”

But Williams does think the U.S. economy needs faster growth. The economy has struggled to expand much faster than 2% a year in this recovery. Last year, the economy only expanded 1.6%.

President Trump has said he can deliver 4% growth. Treasury Secretary Steven Mnuchin has indicated that at least 3% is achievable.

Williams and other Fed officials have said there’s not much more the central bank can do to boost growth. It’s up to Congress, Trump, and businesses, to “unshackle the economy” by finding ways to get more people into the workforce and increase productivity.

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