>ST. PAUL, Minnesota | Fri Feb 4, 2011 8:20am EST
ST. PAUL, Minnesota (Reuters) – Headwinds stemming from the collapse of the housing bubble will hold back the U.S. economy this year, keeping growth closer to 3 percent than 4 percent, a top Federal Reserve official said on Thursday.
While 2011 will be better than 2010, the pace of recovery will not be fast enough to make a serious dent in the stubbornly high jobless rate, Minneapolis Fed President Narayana Kocherlakota said in a speech prepared for delivery at the Twin Cities campus of the University of Minnesota.
Kocherlakota sees the jobless rate staying above 9 percent for the rest of this year. “Even more troubling,” it will still be above 8 percent by the end of next year, he said in the speech, which largely repeated one he gave on January 11 in Madison, Wisconsin.
The U.S. jobless rate was 9.4 percent in December, and economists estimate it rose to 9.5 percent in January. The government will report the January rate on Friday morning as part of its closely watched monthly payrolls report.
