Dallas Federal Reserve Bank President Richard Fisher on Thursday said the United States should have a good snap-back from recession in the final months of 2009, but that future growth could be a slow crawl.

You could have a stout third-quarter (GDP) number, Fisher told reporters after a speech at the University of California in Santa Barbara.

It's encouraging and helpful and hopeful that we have a good third quarter and fourth quarter. But what is the rate of growth after that? And how do we get back to creating jobs?

Fisher said it was too early to guess at the timing or pace of interest rate moves once the Fed starts to reverse its extremely easy monetary policy -- one that has left benchmark rates near zero since December 2008.

You have to feel it. You have to walk through a river feeling the stones underneath your feet, he said. We have to be forceful, or we may have to be gradual. It depends on the circumstances.

Still, with price pressures tilted more toward deflation because of high unemployment and low capacity utilization in the United States economy, inflation should not be a problem for now, Fisher said.

NO BIG INFLATION RISK

The Fed is prepared to pull the trigger on a policy shift when the time is right, he added.

If we conduct ourselves properly, I don't think that inflation becomes a significant risk.

Many Fed watchers expect no move in interest rates from the U.S. central bank until 2011, although derivatives traders are betting a rate hike to come in the first half of 2010.

Overall, the Fed's Eleventh District president gave a downbeat assessment, worrying about the sustainability of growth in the medium term.

The gears are very slow in their rotation, but you might say they're beginning to mesh, said Fisher, who is not a voting member of the Federal Open Market Committee in 2009.

In general, the United States economy is shaping up to be less of a consumption-driven and more of a savings-driven society than has been common in recent decades, he said.

At the tail end of a painful recession, businesses lack pricing power, a condition that caused prices for almost half the items in a commonly used U.S. inflation basket to fall in July, Fisher noted.

Revenue growth at companies has evaporated, and to preserve profits firms will continue to focus on cost control, most painfully by shedding workers and driving those who remain on the payroll to higher levels of productivity.

Responding to a question from an audience member at the UCSB campus, which is perched on the Pacific shore, Fisher said he was praying that the U.S. jobless rate did not hit 10 percent, but saw no guarantee his prayers would be answered.

August U.S. unemployment, due for release on Friday, is forecast at 9.5 percent against 9.4 percent in July.

LONG-TERM PRICE TAG

Fisher largely echoed the tone of minutes from the August FOMC meeting released on Wednesday, which stressed that a gradual recovery was likely at hand.

Households and businesses will focus on shoring up their savings and balance sheets rather than spending money. For consumption, that translates into a slow crawl out of purgatory.

Fisher said huge government spending was helping to propel the economy upward, but carries a long-term price tag including the prospect of higher interest rates as investors respond to the massive issuance of debt.

The major challenge facing U.S. fiscal authorities is meeting the need for near-term economic stimulus while pursuing a practicable plan to stabilize the government's debt-finance obligations.

Fisher said that it is critical that the Fed retain its independence to guide monetary policy.

Interfering with that role would be the biggest mistake Congress could make, he said. It's important that the central bank be left to do what it does without political meddling, and not have the Congress run monetary policy.

(Editing by Jan Dahinten)

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