It was the one-two punch that delivered for attendees.
Offering complementary views on pressing economic issues, Richmond Federal Reserve Bank President Jeffrey Lacker and Maryland Chamber of Commerce President Kathleen Snyder teamed up at a regional economic forum in Frederick on Wednesday to report ? with some reservations ? reassuring news for Marylanders.
“A variety of … measures point to expectations for core [personal consumption expenditures] inflation of about 2 percent,” Lacker said in his talk on the importance of both market perception and real economic activity to inflation.
Lacker oversees a Fed region that includes Maryland and is widely viewed as being opposed to a federal funds rate cut, despite a disappointing first-quarter U.S. gross domestic product growth rate of 0.6 percent and a faltering real estate market. Two percent core is considered marginally high for the Fed.
The overnight rate ? currently 5.25 percent ? is the trendsetting interest rate the Fed charges money center banks. It?s a key way the central bank fights inflation and stimulates the economy.
“Putting it all together,” Lacker said, citing encouraging economic data, “I expect overall growth to come in below trend [2-3 percent GDP growth] in the first half of this year, but to return to trend by the end of the year, based on my expectation that the housing market is likely to find bottom sometime this year.”
Snyder, however, told the forum, “Taxes are going to be raised,” implicating what she said was alargely unfunded $1.3 billion state commitment to education. “The state continues to have a $1.5 billion structural deficit.”
Stressing that her Annapolis-based organization wants to help inform and soften the impact of any looming levies, Snyder said, “This General Assembly and governor are just not going to make $1.5 billion in cuts.”
As a result of this, Snyder said, the chamber has commissioned a study to gauge the effect of each proposed tax on Maryland?s 158,000 businesses ? 154,700 of which have fewer than 100 employees.
“Maryland is a great place to live, work, and do business,” Snyder said, noting that the state?s unemployment rate is below the national average. “We?re trying to find a rational solution to the problem.”
