Correction: Economic Conference story

Associated Press Modified: November 16, 2012 at 7:00 pm •  Published: November 16, 2012
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Under the forecast offered Thursday, unemployment is expected to average 7 percent this year. While a 5.6 percent rate would mark a significant improvement from that, and from the recession high of 8.5 percent in 2010, it's still higher than the pre-recession rate of 5 percent in November 2008.

Even the economy's bright spots also have downsides. Construction, for instance, is rebounding after annual job losses averaging 3.6 percent since 2006, Speaker said. West Virginia's hospitals will face increasing pressure to consolidate because of more federal regulations, eroding cash reserves and uncompensated care that totaled $742 million in 2010, said Thomas Jones, president and chief executive of West Virginia United Healthcare System.

Nationally, the economy should grow by 2.2 percent next year, said Jeffrey Lacker, president of the Federal Reserve Bank of Richmond and the conference's featured speaker. That rate could increase if there's "meaningful progress" on the federal budget and the national debt. Lacker expects such actions in the wake of the general election.

"Until we get a fiscal plan that's sustainable, consumers and businesses are going to be making decisions under this immense cloud of uncertainty," Lacker said. He added, "We're going to have to see convincing progress."

Lacker has repeatedly objected at recent Federal Reserve meetings that its continuing policy steps could lead to higher inflation. Those steps include low short-term interest rates and the buying of mortgage bonds to push long-term interest rates lower and make home buying more affordable. Lacker on Thursday said that monetary policy can do only so much to spur economic growth. He said the time has come to increase interest rates and reduce the supply of bank reserves.

"Accordingly, I have opposed additional easing steps at (Federal Open Market Committee) meetings this year," Lacker said. He added, "We have the tools that we need to withdraw monetary stimulus soon enough and rapidly enough that we keep inflation on target."

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