Fed's Bostic: Soft data doesn't change view of above-trend U.S. growth

BIRMINGHAM, Ala (Reuters) - Recent disappointing retail sales and industrial production data don't yet suggest the U.S. economy will slow more quickly than expected, Atlanta Federal Reserve bank president Raphael Bostic said on Friday, with growth somewhat above trend still his baseline forecast.

"I have not seen a coalescing of data that would suggest we are going to be at trend or below trend. Our outlook for 2019 is still above trend," at around 2.3 percent to 2.5 percent, Bostic said. While slower than last year it is still above the economy's underlying potential of just under 2 percent annual growth, he said.

Fed officials generally expect economic growth in 2019 to be less than it was in 2018, when it was propped up by government spending and tax cuts whose impact the central bank expects to wane.

But in recent months the expectation of how fast and deep that slowdown might become has been clouded by slower-than- anticipated growth overseas, and financial market turbulence in the United States that can to some degree spill over into how consumers spend and businesses invest and hire.

A weak retail sales report for December released this week was followed on Friday by a report showing manufacturing production posted its biggest decline in eight months in January.

But Bostic said that has not yet changed his outlook, or his expectation that the Fed will likely need to raise rates once this year.

“I don’t think it represents a fundamental change in my view of the economy," Bostic said to reporters at a workforce development conference, but if the retail weakness continues "we have to take that on" in economic forecasts.

(Reporting by Howard Schneider; Editing by Andrea Ricci)

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