Plosser: Economy could grow up to 3.5 percent in 2011

The nation's economy could expand 3 percent to 3.5 percent next year, with inflation picking up pace by as much as 2 percent, Federal Reserve Bank of Philadelphia President Charles Plosser said Wednesday. 

"The economy is still in the midst of a modest recovery," Plosser said in an interview on Bloomberg Radio's "The Hays Advantage," with Kathleen Hays. "My confidence that it is sustainable is growing."

Those estimates are higher than the most recent growth numbers released Wednesday by the government. 

The economy grew 2.6 percent from July through September, higher than a previous government estimate, but still below the expectations of economists, the Commerce Department reported Wednesday morning. 

The government had estimated last month that the third-quarter growth would be 2.5 percent, while economists had pegged it at 2.9 percent. The new data is yet another indication that the economic recovery is taking place but is still slow. 

Meanwhile, new data indicated inflation was even lower than previously thought. The price index for personal consumption, which the government uses to track inflation, rose 0.8 percent from July through September, slightly lower than the 1 percent increase estimated last month.

The Federal Reserve has expressed concern about the slow rate of rising prices, which some have argued could lead to deflation.