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Much work remains to maximize U.S. employment and stabilize prices, and the central bank will do its part, an influential Federal Reserve official said on Friday.

The pace of the U.S. economic recovery remains “sluggish” and is likely to slow somewhat this year, said New York Fed President William Dudley. Unemployment is likely to remain “unacceptably high” for some time, he added, while inflation is likely to be below the Fed’s new 2-percent objective for several years.

“Clearly, much work remains to achieve the Fed’s dual mandate of maximum sustainable employment in the context of price stability,” Dudley told reporters in a regular briefing.

The Fed, which has kept interest rates near zero for more than three years, “has done and will continue to do its part in supporting the recovery - but it is not all-powerful,” he added.

“Other complementary policy actions in housing, fiscal policy and structural adjustment or rebalancing of the economy will be essential if we are to achieve the best available recovery.”

Aside from the low rates, the Fed has also bought $2.3 trillion in long-term securities in an unprecedented drive to spur growth and revive the economy after the worst recession in decades. Yet the recovery has been slow and the outlook issued by the Fed this week was bleak, leading the central bank to say it expects to keep rates “exceptionally low” at least through late 2014.

Dudley, a permanent voter on the Fed’s policy-setting committee, added that he expects “moderate” growth this year, and warned the risks are skewed to the downside in part because of Europe’s debt crisis business cards design.

The economy continues to operate with “significant excess slack,” he said, adding: “Inflation has retreated and may be headed down further.”

On Wednesday, Chairman Ben Bernanke said the Fed stood ready to offer more stimulus in the form of bond purchases if inflation remains below 2 percent - a formal target unveiled earlier that day - and if unemployment, now at 8.5 percent, remains high.

The speech by Dudley, a policy dove focused on driving down the high jobless numbers, could add confidence to those who, since the Wednesday meeting, see another round of asset purchases - including mortgage-backed securities - as all but inevitable.

Still, the slow overall recovery has cast some doubt on the U.S. central bank’s far-reaching strategy, with some, including congressional Republicans, warning that the massive quantitative easing efforts over the last few years could crimp the Fed’s ability to tighten policy when the time comes.

The Fed’s ultra easy monetary policy stance, to nurse the recovery, got some support from data on Friday showing U.S. gross domestic product expanded at a 2.8 percent annual rate in the fourth quarter of 2011.

It was a sharp acceleration from the 1.8 percent clip of the prior three months and the quickest pace since the second quarter of 2010. But it was a touch below economist expectations in a Reuters poll for a 3-percent rate, and nearly 2 percentage points were attributed to the build-up in business inventories.

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WASHINGTON • If timing is everything, as the saying goes, then Matt Blunt might consider a job giving advice on when to make career changes.

Blunt picked 2004 as the year to run for governor of Missouri. It turned into a strong year for Republicans and, at age 33, he became America’s youngest governor.

In his new incarnation, Blunt last year became chief spokesman and a lobbyist in Washington for Detroit’s Big Three automakers just as the American automotive industry was enjoying a resurgence.

It is one of several positions Blunt holds these days that enable him to prove life after Missouri’s Governor’s Mansion can be rewarding and, he says, enjoyable.

As president of the American Automotive Policy Council, one of Blunt’s main tasks is reminding Congress of his industry’s recent success, a rare good news story about American manufacturing.

Two years after General Motors and Chrysler emerged from bankruptcy, both companies, along with Ford, reported profits and increasing sales in 2011. Their turnaround is hailed in reports such as a recent Time magazine cover story titled, “How America Started Selling Cars Again.”

Yet many Americans — some of them in Congress — see the automotive industry as bloated and inefficient, surviving on government bailouts.

“What some people believe about automobile manufacturers, the American-based companies, isn’t accurate,” Blunt said. “The companies today are fundamentally different than they were just a few years ago, in terms of what they make and how they make it.”

Blunt’s portfolio these days includes the vital matters affecting American carmakers, including global trade agreements, new fuel economy standards and a recent recommendation to ban texting and cellphone use in automobiles.

Blunt, who turned 41 in November, is leading a life different from his sometimes rocky four years as a young governor, in which he endured criticism for his cuts to Medicaid and low approval ratings at times.

After leaving office in January 2009, he moved swiftly into the world of business. Besides his Big Three job, he is a director for Copart Inc., an online auto auction company in California that claims to sell 1 million vehicles yearly. He is a senior adviser for Rubicon Global, an Atlanta-based waste management firm, and an advisory board member for private equity funds.

Rather than living in Jefferson City or Springfield, Blunt, his wife, Melanie, and sons Branch, 6, and Brooks, who turned 2 on New Year’s Day, reside now in Middleburg, Va., situated in rolling horse country that has been home to such notables as Jacqueline Kennedy Onassis and Elizabeth Taylor.

Blunt says he is comfortable in a part of the country where he has spent considerable time. He graduated from the Naval Academy in nearby Annapolis, Md., and he was stationed on a Virginia-based ship. His wife is a Virginia native.

In recent interviews, Blunt, whose father, Roy, just completed his first year in the U.S. Senate, said he has no regrets in deciding not to seek a second term.

“I loved being governor. It was a great experience. I was proud of what we accomplished,” he said. “But I don’t know that over another four-year term, I would have been particularly effective. I don’t know there’s much that I would have gotten done.”

He added, “I don’t necessarily miss politics.”

understanding autos

Blunt is dealing now with politics of a different order, in some cases global. He was outspoken last fall in pressing to keep Japan out of the budding Trans-Pacific Partnership free trade alliance, noting Japan’s protectionist policies that keep out all but a few thousand American cars yearly.

Trade is a key focus for Blunt but just one of many focuses for an industry that experts say needs help.

Joe Wiesenfelder, executive editor of Chicago-based Cars.com, said he sees “a gross misunderstanding in Washington about developing and building cars and how long it takes, about the inconsistency of the market and about inconsistency of regulation and the effects on companies.”

Until two years ago, Ford, Chrysler and GM were aligned in Washington with the Auto Alliance, which also includes foreign automakers. But the interests of domestic and foreign companies diverged just as legislation and government rules were becoming more consequential.

Blunt’s background as a governor likely played a role in his selection as the industry sought to navigate tricky political waters in Congress after the controversial bailouts No teletrak payday loan.

Blunt technically is not a registered federal lobbyist because he spends less than 20 percent of his time lobbying. Nevertheless, he works the halls of Congress, trumpeting the key role of the Big Three in the nation’s economy. GM, Ford and Chrysler will add 34,000 jobs in coming years, he said, which translates to 400,000 jobs in the economy supported by automotive plants.

“The American companies are competitive, they are productive and they are making great products,” Blunt said, sounding like the car salesman he has become. “Because of that, what recovery we do have in the American economy, the automobile makers are playing a big part.”

As a self-described conservative Republican, Blunt might find old allies who decry the $80 billion bailout of Chrysler and GM. Most of the money has been paid back, and the White House projected the cost to taxpayers at $14 billion.

“Decisions that President Bush made at the end of his administration and President Obama made early in his administration have had a successful outcome,” he said. “It’s always an academic debate whether a different road map would have led to the success.”

As governor, Blunt was an advocate of smaller government. Those sensibilities could come into play as government moves more aggressively to dictate vehicle design.

After an agreement with both domestic and foreign manufacturers, the administration of President Barack Obama in November proposed nearly doubling fuel economy requirements to 54.5 miles per gallon by 2025. In 2010, the administration completed rules to raise the fuel standard to 35.5 mpg by 2016. The current requirement for new autos is 27.3 mpg.

Foreign-based manufacturers believe the White House has tilted the rules in favor of the domestic industry. True or not, the Big Three will need to be vigilant as regulations are implemented; their focus will be on easing the burden those regulations could cause.

“It’s the classic ‘devil’s in the details,’ and it will be very important to see the rules filed by all the agencies,” Blunt said.

Texting debated

Automakers took notice recently when the National Transportation Safety Board said states should ban texting and cellphone use in vehicles. The board made the recommendation after concluding that a driver’s texting was a factor in a deadly pileup near St. Louis.

Blunt said companies he represents are paying close attention because “they really do believe that you can integrate technology into a vehicle that’s not only safe but safer than the way most drivers use technology today.”

“As you think about what you might or might not ban in a vehicle, it’s important to do it in a way that wouldn’t inhibit safety ideas some of the companies have today, and at the same time be realistic,” he said. “Quite frankly, I don’t think (a cellphone ban is) very realistic.”

As a lobbyist, Blunt seemingly could have a ready ear from father Roy, who won election this month to a Senate GOP leadership slot. Matt Blunt said he doesn’t intend to talk business at family gatherings, perhaps because Roy Blunt has in the past been criticized for ties to lobbyists in his family and otherwise.

Matt’s brother, Andy Blunt, works at a law firm in Jefferson City with a long list of lobbying clients. His sister, Amy, maintains some lobbying clients in her business in the state capital, which largely deals with helping candidates comply with Federal Election Commission rules. Roy Blunt’s wife, Abigail, was a lobbyist for tobacco giant Philip Morris before joining Kraft’s legislative affairs team.

Andy Blunt said his brother arrived in a position that suits his talents.

“He’s a great manager and executive and has the ability to focus on details while thinking about long-term strategy,” he said.

Blunt, who acknowledged driving a German-made automobile in the past, also is walking the talk now — driving it, actually.

He gets around Washington in a Chrysler-made Jeep Grand Cherokee.

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LONDON

WASHINGTON

An alleged renegade trader accused of losing Swiss banking giant UBS about $2 billion in unauthorized trading was charged Friday with fraud and false accounting, and ordered to appear before a London court.

City of London police said that 31-year-old Kweku Adoboli would appear at a magistrates’ court in the British capital on Friday.

“He remains in police custody and is due to appear at City of London Magistrates this afternoon,” the police department said in a statement. It said an investigation involving financial regulator the Financial Services Authority, the Serious Fraud Office and the Crown Prosecution Service was continuing.

Law firm Kingsley Napley, which represented Nick Leeson _ the trader who brought down British bank Barings in 1995 after he made around $1.4 billion of losses in unauthorized trades _ said that it had been hired to represent Adoboli.

In Switzerland, UBS faced pressure to explain how its managers failed to catch the $2 billion loss, and how monitoring systems had been unable to flag up the alleged unauthorized trades.

Adoboli, born in Ghana, has been employed by UBS on an equities desk known as Delta One and worked with exchange-traded funds _ which track different types of stocks or commodities, such as precious metals no checking account payday advance.

Some commentators and politicians called for senior managers at UBS to take responsibility for the loss.

“Until UBS has explained in detail how such a significant loss due to unauthorized trading could happen, and how the problem will be solved, confidence will remain impaired,” said Andreas Venditti, an analyst at Zuercher Kantonalbank.

The international banking industry has been trying to implement stricter controls on traders in the wake of a 2008 scandal at France’s Societe Generale, when trader Jerome Kerviel gambled away euro4.9 billion ($6.7 billion), and the infamous Leeson case.

UBS stock on Friday recovered some of the losses suffered the day before. Investors took the chance to buy the shares cheaply, sending their price up 3.3 percent to 10.07 Swiss francs ($11.52) on the Zurich exchange by early afternoon. Shares had slumped 10 percent the day before, after the bank said a lone employee had caused the massive loss.

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Stocks edged lower in early trading Thursday after the government reported that claims for unemployment rose last week, a sign that layoffs are increasing.

First-time applications for unemployment benefits rose last week to 414,000. Economists had expected a slight fall to 405,000. The prior week’s estimate of new claims was also revised higher.

Thirty minutes after the market opened, the Dow Jones industrial average was down 42 points, or 0.41 percent, to 11,373. The Dow jumped 275 points Wednesday after a German court cleared the way for that country’s participation in the bailout of Greece and other European countries.

The Standard and Poor’s 500 index was down 8, or 0.7 percent, to 1,190. The Nasdaq composite fell 12, or 0.5 percent, to 2,536. The Nasdaq had been up in the first few minutes of trading.

Weekly applications for unemployment benefits are a closely-watched figure on Wall Street. Rising claims can add to concerns that the job market is stalled and the U.S. economy is headed for another recession. Applications need to fall below 375,000 to indicate sustainable job growth. Last week the government reported there was zero job growth in the U.S. economy in August.

Not all of the economic news Thursday was negative. American exports of cars, airplanes and other goods reached an all-time high in July, the Commerce Department reported. Economists said the jump in exports suggest future growth in the U.S. economy.

Investors are waiting for two-closely watched speeches Thursday. Federal Reserve Chairman Ben Bernanke will give a speech in the afternoon detailing his outlook for the U.S. economy. President Barack Obama will appear before Congress tonight and lay out his jobs plan.

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The European Union will avoid slipping into recession and is doing all it can to tackle the region’s debt problems, a top official said Monday.

European Commission President Jose Manuel Barroso, who is in Australia on his way to a meeting of South Pacific states, said the 27-nation EU and the euro common currency are resilient and the region will continue to grow, albeit modestly.

“We don’t anticipate a recession in Europe,” Barroso told reporters after a meeting with Australian Prime Minister Julia Gillard and senior ministers. “The latest forecast by the European Commission shows that there will be growth _ modest growth, it’s true.”

“The European Union and euro are strong and resilient and we are doing all it takes from tackling the underlying budget problems to strengthening the governance of the euro zone, from tighter financial regulation to improving our overall competitiveness,” he said.

Disagreements over Greece’s massive budget deficits and how to make up for the funding shortfalls led international debt inspectors to suspend their review and leave Athens last week, as Greek Finance Minister Evangelos Venizelos warned an even deeper recession in his country will hurt its deficit-cutting efforts.

The unexpected departure on Friday of the debt inspectors _ officials from the European Commission, the European Central Bank and the International Monetary Fund _ marked yet another occasion of conflict between international institutions demanding greater reform efforts and a government and country that are reaching their limits.

But Barroso, who heads the EU’s executive arm, said it would be premature to make an assessment now on the Greek government’s latest efforts to tackle debt.

Greece’s troubles are being worsened by a slowing global economy, with growth tapering off in major economies such as Germany, China and the United States.

World business leaders and finance experts gathered in Italy for the annual Ambrosetti Forum at the weekend offered a downbeat assessment of the global economy _ with several predicting another recession due to a calamitous cocktail of sluggish growth, eurozone dysfunction, and financial market volatility.

The Australian government has criticized a lack of political will in Europe to tackle serious economic reform. Deputy Prime Minister Wayne Swan co-wrote an article published in The Financial Times newspaper last month that said a crisis in confidence in policy makers posed a greater challenge than any economic barrier. But Gillard on Monday praised Europe’s efforts to tackle its sovereign debt crisis.

“Australia certainly welcomes the important steps European authorities have taken to address sovereign debt problems and to press on with reform,” she told reporters.

“We know and understand these are difficult decisions, but we know that tough decisions are needed to stabilize financial markets,” she said.

Yet Gillard said she was “not on the same page” with Barroso on the need for a financial transactions tax on the European banking industry. The proposal will be put to a summit of the Group of 20 rich and developing nations in Cannes, France, in November.

While in Australia, Barroso and Gillard agreed to expedite negotiations on a treaty that would formalize Australia’s relationship with the EU.

They also agreed that officials will begin talks about how the EU’s carbon emissions trading scheme can be linked with Australia’s scheme which is scheduled to come into force in 2015.

Barroso is traveling to Auckland, New Zealand, to attend an annual South Pacific leaders’ forum this week.

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Italy’s government, waffling for weeks on an emergency austerity plan, received a stern warning Saturday from the European central bank chief to promptly implement the deficit-fighting measures and to stay on target.

Premier Silvio Berlusconi is caught between trying to placate allies and satisfying both nervous markets and worried European Union officials.

Italy’s Parliament is preparing to take up approval of the package of spending cuts and new taxes which Berlusconi promised will add up to a euro45.5 billion ($64.86 billion) austerity package. But every few days has seen some measures _ including new levies on high-earners and reform of a generous pension system _ dropped to appease coalition partners.

With Italy’s uncertainty, European Central Bank President Jean-Claude Trichet urged Rome to keep to its word and push the package, announced in early August, toward completion.

“It is essential that the target which was announced to diminish the deficit will be fully confirmed and implemented,” Trichet said at an annual economics forum at a Lake Como resort. “This is absolutely decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and its credit worthiness.”

Italy got a boost last month by the ECB when Rome’s borrowing costs dipped, thanks to the central bank’s program of buying peripheral bonds. The intervention helped stem the widening debt costs.

The Italian foreign minister, Franco Frattini, told reporters as he arrived late Saturday at the forum that his government will insist that the ECB keep buying the bonds, the Italian agency LaPresse reported from Cernobbio.

The outgoing central banker deemed as “extremely important” all measures to improve the “flexibility” of Italy’s economy. Both industrialists and union leaders have denounced the austerity plan as relying too much on slashed spending and new taxes and offering little to stimulate the country’s practically flat growth or to encourage job creation.

But the ECB’s own policies were being taken to task on the sidelines of the annual Ambrosetti forum.

“We need more stimulus, we need a weaker euro,” which could spur exports, said New York University economist Nouriel Roubini. “You can’t just talk about austerity.” He urged the ECB to “at least send a signal there is going to be monetary easing” soon.

Asked by The Associated Press to respond to Roubini’s criticism, Trichet, during a brief stroll of the posh lakeside Villa d’Este grounds at lunch time, declined to comment, saying he wouldn’t talk about matters related to policy.

With Berlusconi widely considered to be distracted by a sex scandal linked to his self-acknowledged penchant for young, beautiful women, Roubini expressed concern that whatever the measures are, markets won’t be reassured.

“Italy is always bickering,” the economist, who has warned of a possible double-dip recession in some European countries, told reporters during a break in the closed-door forum sessions.

“Investors have lost credibility in this government,” Roubini added, noting the repeated widening of the spread between Italy’s bond interest rates and that of benchmark German rates.

The latest Berlusconi government proposal to achieve several billion euros in deficit reduction through a crackdown on widespread tax evasion could also rattle the markets since it’s impossible to predict just how much revenue that strategy could achieve.

Earlier in the day, Italian President Giorgio Napolitano echoed Trichet’s call to his country, saying the proposed measures must be quickly “translated into concrete terms” to achieve Berlusconi’s goal of balancing the budget by 2013.

“In effect, we need now and in the near future from Italy clarity and certainty of intentions and of results,” said Napolitano, who noted that an earlier austerity plan in July failed to placate nervous markets.

Napolitano urged Berlusconi’s bickering government to be “coherent and courageous” in meeting the economic crisis. He recalled that Italy, suffering from lackluster productivity, already was lagging before the latest global economic crisis.

“There is no doubt that in general the political (arena) is struggling, in the face of the tensions of the crisis and the risks to which the eurozone is exposed, and that the internal political and social equilibrium of individual countries are being put to a tough test,” Napolitano said in a video hookup from the presidential palace in Rome.

Austria’s former chancellor, Wolfgang Schuessel, went further in characterizing the effects of the crisis on citizens.

“This loss of confidence and trust is much more damaging than any economic data,” he said.

The three-day meeting of bankers, economists and politicians began on Friday and has been marked by generally gloomy assessments of global economic prospects.

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Government-controlled mortgage company Fannie Mae says its second-quarter loss attributable to shareholders widened as it continues to seek out loan modifications to help lower defaults amid the ongoing difficulties in the housing and mortgage markets.

Fannie Mae lost $5.18 billion, or 90 cents per share, for the period ended June 30. That compares with a loss of $3.13 billion, or 55 cents per share, a year earlier.

The quarter included $6.1 billion in credit-related expenses tied to its pre-2009 book of loans cash advance now. Fannie Mae said Friday that it aims to lower its credit losses while keeping as many families as possible in their homes.

The period’s results also included $2.3 billion in dividend payments to the U.S. Treasury.

Revenue climbed to $5.24 billion from $4.5 billion.

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