Disappointing economic growth in the first half of 2011 clearly can not be blamed only on one-off factors, one of the central bank's most influential policymakers said on Friday, adding he had cut his expectations for the pace of the recovery.
William Dudley, the president of the Federal Reserve Bank of New York and vice chair of the Fed's policy-setting committee, told a media briefing economic growth so far in 2011 has been "quite a bit slower than we expected earlier in the year".
Some of the forces that held back U.S. growth were temporary in nature, such as higher food and energy prices that weighed on consumer spending and supply disruptions from Japan's earthquake and tsunami, he said.
"These restraining forces have abated and thus, we should see stronger growth in the second half," Dudley said.
"But it is clear that not all of the weakness was due to these one-time factors."
Dudley said the jobs market has worsened again over the past few months, household spending has flattened out and the housing sector is "depressed".
The central bank's policy-setting Federal Open Market Committee (FOMC) on Tuesday took the unprecedented step of promising to keep interest rates near zero for a set period of time - at least until 2013. The Fed also said it was weighing other options to help strengthen a weak recovery.
"The statement issued by the FOMC earlier this week presents a sober assessment of the state of the U.S. economy," Dudley said.
He didn't expand on Fed policy, but said after Tuesday's statement market interest rates "generally moved lower which should help provide some additional support for economic activity and jobs."
But he added, conditions remain "unsettled", with the equity market, in particular, remaining "very volatile".
Thursday was the fourth day in a row the S&P 500 <.SPX> ended with a move of more than 4 percent, and the index has fallen for 11 of the past 14 days.
(Reporting by Edith Honan, Writing by Kristina Cooke, Editing by Chizu Nomiyama)