For immediate release: Aug. 25, 2004
ATLANTA FED PRESIDENT EXPECTS
OUTPUT AND JOB GROWTH TO CONTINUE
ATLANTA — Despite some softening data in recent months, the U.S. economy appears to be on course to sustained growth as business spending continues to strengthen, said Jack Guynn, president and chief executive officer of the Federal Reserve Bank of Atlanta.
Guynn said an unwelcome rise in energy prices this summer has placed an unusual burden on consumer spending. But he said he anticipates a return to respectable consumer spending over the coming months. He cited the increasing breadth of the expansion as a basis of his forecast. “If you look at the economy sector by sector, the likelihood of solid and sustainable growth looks good,” he said.
While he acknowledged the July payroll employment report was weaker than anticipated, Guynn added, “I don’t like to read too much into a month or two of data.”
In discussing price pressures, Guynn noted that while broad inflation remains in check certain sectors of the economy have experienced notable price increases. “Although troublesome inflation problems do not seem imminent, a continuation of accommodative monetary policy is not appropriate as the economic expansion gains momentum and breadth,” he said, noting that the FOMC increased the Fed funds rate by a quarter point in each of its two most recent meetings.
“These policy moves were not taken, as some have suggested, because policy makers believed the economy was growing too fast. Rather the data and anecdotal reports we have at this time continue to suggest we can work our way toward a more neutral interest rate setting in a ‘measured’ way.”
Speaking at the TAPPI Decorative and Industrial Laminates Symposium in Atlanta, Guynn also discussed prospects for manufacturing in a climate of intense global competitive pressure. He compared the loss of jobs in manufacturing in recent decades to the erosion of employment in agriculture during the 20th century. But he added that manufacturing output will likely continue to increase because of ongoing productivity gains. “Manufacturing remains vital to our nation’s economic health and balance,” he added.
The Federal Reserve Bank of Atlanta serves the Sixth Federal Reserve District, which encompasses Alabama, Florida, Georgia and parts of Louisiana, Mississippi and Tennessee. As part of the nation’s central banking system, the Atlanta Fed participates in setting national monetary policy, supervises numerous commercial banks and provides a variety of financial services to depository institutions and the U.S. government.