Atlanta Fed President Expects Moderate and Better-Balanced Growth for the U.S. Economy in 2003
For Immediate Release: Jan. 6, 2003
ATLANTA - The U.S. economy in 2003 should grow slightly faster than it did in 2002, and growth should be more broad-based this year, according to Jack Guynn, president and chief executive officer of the Federal Reserve Bank of Atlanta. In a speech to the Atlanta Rotary Club today, Guynn also discussed how the United States’ most recent recession was different from previous ones, thus making this recovery different from previous recoveries.
In his remarks, Guynn said that he expects U.S. gross domestic product (GDP) to grow around 3 percent in 2003. He also emphasized that, unlike last year, demand should be less concentrated in particular areas, such as housing and autos. Guynn indicated that inflation in 2003 should remain in the same range as in 2002, around 2 percent as measured by the Consumer Price Index. He said that he expects the employment outlook for 2003 to improve, but he noted that the jobless rate could get slightly worse before moving in the right direction during the year.
In comparing this recovery to previous ones, Guynn noted that consumer spending remained relatively strong during the nation’s most recent economic contraction. For this reason, Guynn said that he did not expect consumer spending to surge but expects it to continue to grow at a moderate rate instead.
“This year, instead of the resounding starting boom we usually expect from the consumer sector, businesses should see continued improvement in profit growth — smaller than the late 1990s boom years, perhaps, but no less real. When that happens — and when firms see that profits are sustained — I think businesses will start shifting their priorities away from short-term cost reductions and toward a longer-term focus on product innovation and new sources of revenue. This shift should show up in greater investment spending and growing employment.”
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.