Investing.com - l Reserve Bank of New York President William C. Dudley said Monday he was growing more and more hopeful that the U.S. economy is improving and added fiscal uncertainties may no longer be dragging down recovery as in recent months.
"While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015. The private sector of the economy should continue to heal, while the amount of fiscal drag should subside," Dudley said in prepared remarks of a speech he delivered at Queens College, Flushing, New York.
"Despite near-term concerns, growth prospects among our major trading partners will improve further next year. This combination of events is likely to create an environment in which business investment spending will strengthen."
As the economy picks up, expect to see substantial improvement in labor market conditions and a gradual uptick in inflation back towards the Federal Reserve's 2% target rate.
Earlier this month, the Bureau of Labor Statistics reported that the U.S. economy added 204,000 jobs in October, far surpassing expectations for a 125,000 increase. Official data also showed recently that the U.S. economy grew 2.8% on year in the third quarter, well beyond expectations for 2.0% growth.
Dudley, often viewed as a policy dove, made his comments just days after Fed Chair Nominee Janet Yellen told the Senate Banking Committee that the U.S. central bank remains committed to keeping its USD85 billion monthly asset-purchasing program in place until economic indicators point to a more robust recovery.
Stimulus programs such as asset purchases seek to drive recovery by pushing down interest rates, weakening the dollar and boosting stock prices in the process.
Dudley said he was looking forward to seeing that recovery pick up soon.
"I have to admit that I am getting more hopeful," he said.
"Not only do we have some better data in hand, but also the fiscal drag, which has been holding the economy back, is likely to abate considerably over the next few years at the same time that the fundamental underpinnings of the economy are improving."
Earlier this year, congressional Republicans and Democrats sparred over fiscal spending and shut down the government for more than two weeks in the process.
The dollar came off earlier lows after Dudley spoke though it still remained in negative territory.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.08% at 80.81.
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