Head of Philly Fed Sees Decline Of Recession Threat

PHILADELPHIA (CBS) -- Charles Plosser, president of the Philadelphia Federal Reserve, is forecasting economic growth of three percent or more this year.

He made the prediction in a speech at the Federal Reserve Bank this morning.

Plosser (above) says he believes the risk of a so-called "double dip recession" has passed and that the recovery will remain on track. That's the good news.

But there was bad news, too -- on employment.

"The unemployment rate will decline to acceptable levels at only a very gradual pace," Plosser told the attendees.  "The shocks and dislocations that we experienced during this crisis were significant and painful, and it will take some time for the imbalances in the labor market to be resolved."

Plosser also took issue with the Fed's recent decision to purchase $600 million in Treasury securities. He says publicly disagreeing with his colleagues about that is healthy and should lead to better policy decisions.

Reported by Pat Loeb, KYW Newsradio 1060.