Clip is from October 5 (last Monday evening). Nightly Business Report still operates in the stone age and doesn't allow video embedding, so the inside link takes you directly to the NBR page. Fisher begins at the 1-minute mark and his interview with Susie Gharib runs approximately 6 minutes. We've got the complete transcript inside.
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SUSIE GHARIB: Don't count on a second stimulus package to give the economy a boost. That's the word today from the Obama administration. The White House said President Obama's economic team is considering ways to prop up the labor market, but it has quote no plans for another economic stimulus package. So does the economy need more stimulus? Joining us now to talk about that and the outlook for the recovery, we're happy to have with us Richard Fisher, president of the Federal Reserve Bank of Dallas. Mr. Fisher, welcome back to NIGHTLY BUSINESS REPORT.
RICHARD FISHER, PRES., FEDERAL RESERVE BANK OF DALLAS: Thank you, Susie.
GHARIB: Let me begin by asking, do you think it's time for a second stimulus package?
FISHER: Well, first of all, I represent the central bank of the United States, not the fiscal authorities, Congress and the executive branch. We are in a period of recovery from the enormous downswing we had due to the financial crisis. I expect that we're going to have a couple of quarters of positive growth. The question is what carries on from there? And as I understand it and I think most people understand it, the package that already is out there really kicks in next year. So it's up to the political authorities to make that decision, but it seems to me that we need to see what happens and what ensues from the program that is already in place.
GHARIB: Well, there are fresh concerns about the economy, especially after that jobs report came out last week. So how would you describe the state of the economy right now?
FISHER: Well, again, I like to think in terms of the shape of a check mark. We had a very down, sharp down swoop. We're having an inventory construction and some of the negatives are being eliminated so we're coming back up. Then the question is, as you go further out the curve, what is the slope of that curve? How steep will it be? Or will it be flat like a square root sign? So I expect that the growth coming forward after a couple of quarters of positive growth, again this is sort of guesswork. Forecasting as you know is created to make as astrology look respectable as John Kenneth Galbraith once said, but probably two quarters of 2 percent plus growth or maybe a little more than that and then the real issue is what ensues in 2010? We're going to shift to more savings from less consumption. We should have a pickup in demand for our net exports and some other positive factors, but the real question mark, Susie, is what happens as we go past the next two quarters or past this current quarter, third and fourth quarter. And as we all know, employment is a lagging indicator. It takes awhile for things to pick up again particularly after a huge financial crisis. So I think it's going to be a very slow process.
GHARIB: I'm sure you've heard the new conversation among economists. They're talking about double dip recession, that the economy might slide in to another recession. What are the chances of that happening?
FISHER: Well, I don't know what the exact chances are. But I don't consider that a likely scenario right now. I do think we're going to have to be tolerant with slower growth than we're used to, coming out of some of these corrections that we've had. And we're just going to have to be patient. And I think the main thing for the fiscal authorities and again I'm not one of them -- that is to be mindful of the fact that we have a great deal of debt. A program is already in place. That program wasn't front loaded. It was loaded so that we continue on through as we went through time. And to let that program do its work and then let the animal -- the markets pick up and replace what I call the prosthesis of government support. When we have that then we have sustainable economic growth. GHARIB: Let's talk a little bit about the Fed's own policies. There are some forecasts that the Fed is going to move away from its zero interest rate policy by the middle of next year. In your view, is that too soon or too late?
FISHER: Depends on the circumstances. We have been very accommodative, not just in terms of interest rates. Interest rates, you know and your viewers know are between zero and 1/4 of 1 percent. But in the other activities we undertook, at risk by the way, to get the juices of the market economy and particularly the financial markets, commercial paper, asset-backed securities and others working again, they seem to have had a positive effect. Those facilities particularly commercial paper market and other initial liquidity facilities put together are diminishing in size as the market takes over. But in using these various different tools that we used, added a great deal of liquidity, accommodation to the economy and I think they work their purpose providing a bridge between the crisis and then a new fiscal package and now also letting the private sector go through the correction and begin to grow again which we hope ensues.
GHARIB: So what is the Fed strategy about its own exit strategy from withdrawing stimulus from the capital markets?
FISHER: Again, as you know, we all speak for ourselves. I cannot speak for all my colleagues.
GHARIB: That's fine. We're interested in your view.
FISHER: Well, we've I think been quite public in the fact that if and when it is necessary that we're going to definitely execute an exit strategy so that we don't, should the economy pick up aggressively, which I think is unlikely in the foreseeable future, that we will make sure that all the reserves that have been accumulated don't then go back out in the system and become an inflationary force. That's not the issue right now. The issue right now is excess slack, disinflationary forces that are acting upon the economy, businessmen and women that are trying to control costs and the biggest control of cost factor is labor and trying to figure out how to grow their top line. So right now the pressure is not on the inflationary side, it's on the disinflation, deflationary side and our exit strategy has to be designed so that we get out in time -- and this is a matter of judgment -- so that we don't create an inflationary force once the economy picks up.
GHARIB: Right, it's a real delicate.
FISHER: But that is not the pressure right now Susie.
GHARIB: It is a very delicate balancing act, but what could alter that timetable that you have just laid out?
FISHER: Well, this is a judgmental business. There is no precise mathematical formula or timing or forecasting formula for this to occur. I believe that the Federal Reserve has done its job. We pulled the economy back from the abyss. We will have to remove that accommodation in a timely way once the gears begin to mesh. But right now they're not meshing. And we'll have to wait and make our own judgment as a collective body at the Federal open market committee as to when the right timing will be. I want your viewers to understand that we are ready to do so. The question is when is the appropriate time and it is not right now.
GHARIB: All right. Mr. Fisher, thank you so much for coming on our program. We really appreciate it.
FISHER: Thank you, Susie, so much.
GHARIB: My guest tonight, Richard Fisher, president of the Federal Reserve Bank of Dallas.