Atlanta Fed Chief Describes Current Economic Weakness
Atlanta Fed President and Chief Executive Officer Dennis P. Lockhart said in a Nov. 7 speech that he expects substantial economic weakness to extend into 2009 and that the unemployment rate will rise further.
"Problems are now broad based. Beyond the housing sector, activity has fallen in auto manufacturing, transportation and distribution, retail trade, financial services, and some segments of commercial real estate," Lockhart said.
Moderating inflation foreseen
Speaking at a conference in Palm Beach, Fla., Lockhart described a variety of policy actions taken by the Federal Reserve, the U.S. Treasury Department, Congress, and other countries’ central banks to alleviate ongoing financial market strains and improve the flow of credit.
"In my view, these decisions were forceful responses to deterioration of the overall economy and the continuing dysfunction and volatility of the financial system. Now is not a time to be tentative," he said, adding that he's seeing some signs of improvement in financial markets.
Structural imbalances must be addressed
"In my view, a mere cyclical recovery that returns to the status quo ante will not be durable," Lockhart added. "The shape of that recovery must witness coming to grips with deep structural imbalances in our economic arrangements if we are to lower the potential for recurrence of instability."
November 25, 2008