WASHINGTON, Dec 27: Most of the signs of a solid US economic revival seem to be falling into place entering 2004, but Federal Reserve Governor Mark Olson warns it is too soon yet to pop any champagne corks.

In an interview with Reuters this week, Olson noted that corporate America appears reluctant to join the party by boosting investment, something the Fed considers vital to maintaining spending momentum, carried almost wholly by consumers since the 2001 recession.

Still, Olson said signs the job market is turning a corner — four straight months of overall employment gains and fewer weekly claims for unemployment benefits — have been highly encouraging.

“I don’t think you could say that all questions of sustainability are behind us, but virtually all of the signs are positive,” said Olson, who joined the Federal Reserve Board in December, 2001.

“But it’s a little too early to declare a victory,” he added.

The economy has crawled back to a relatively healthy state after a weak recovery from the mild 2001 recession, though it is not vigorous enough to make a dent in the two million jobs lost since the start of 2001.

Growth accelerated in this year’s third quarter — to a sizzling 8.2 per cent annual rate — but that is widely forecast to ease to 4 per cent or slightly better in the final quarter of this year and into 2004.

Fed policy-makers sought to invigorate the anaemic recovery by taking the bellwether federal funds rate on overnight loans between banks down from 6-1/2 percent at the start of 2001 to a 45-year low of 1 per cent in June this year.

While speculation has turned to when they will reverse course and begin raising rates to ward off potential inflation, policy-makers have been carefully highlighting the degree of lost ground to be made up before prices face upward pressure. Economists have taken this as a strong signal rates will stay at stimulative levels for the foreseeable future.

On Friday, Dallas Federal Reserve President Robert McTeer, who heads one of the 12 regional Fed banks, said he saw no evidence of inflation on the horizon and said there was no reason to tighten monetary policy until it appeared.

“We still have a lot of slack left over ... and we still have rapid productivity growth, so I don’t worry too much about inflation until a lot of that slack is taken up,” McTeer told cable television network CNNfn.

In November, US factories, mines and utilities were running at 75.7 per cent of capacity, the best pace since September 2002 but well below the roughly 80 per cent level economists take as a harbinger of building price pressures.—Reuters