Atlanta Fed President Lockhart: Economy on Better Footing at Dawn of 2014
The nation enters 2014 on firmer economic ground than it was on a year ago, Atlanta Fed President Dennis Lockhart said during his recent annual economic outlook speech at the Rotary Club of Atlanta.
Lockhart listed progress on several fronts since the Great Recession:
Because of those factors and others, Lockhart said he expects the stronger economic growth of the second half of 2013 to continue this year. Given his outlook—gross domestic product growth of 2.5 percent to 3 percent for 2014—it's reasonable to expect more progress on the jobs front, Lockhart said.
Labor market progress significant, but uneven
On the other hand, the labor force participation rate has declined significantly since 2009—in part because of baby boomers retiring, and in part perhaps because of discouraged potential workers giving up the search for a job. Other measurements, such as the share of workers who are working part-time but want a full-time job, also show underwhelming improvement. Meanwhile, income growth remains weak.
"To sum up, these comparisons of employment data suggest that the labor market is not as healthy as the improved unemployment rate might indicate," Lockhart explained.
Fed in transition
"If all goes as expected, there is a policy transition under way from a QE world, so to speak, to a post-QE world. That decision was made in December," Lockhart said, referencing the Federal Open Market Committee's decision to start reducing its large-scale asset purchases (a policy known as quantitative easing, or QE) by $10 billion per month. "And the economy itself seems poised to transition to better conditions."
January 28, 2014