Atlanta Fed President Says More Rapid and Broad-Based Growth Looks Increasingly Likely
For immediate release: Sept. 22, 2003
JACKSONVILLE, Fla. - Boosted by higher profits and business spending, U.S. economic growth is becoming more broad based and gaining momentum, said Jack Guynn, president and chief executive officer of the Federal Reserve Bank of Atlanta.
Speaking to the Meninak Club of Jacksonville, Fla., Guynn cited several factors that indicate stronger economic growth into early 2004: GDP has expanded for seven straight quarters, financial conditions have strengthened, stock prices have increased and yield spreads on high-yield bonds have narrowed, a sign that there?s a perception of less risk.
"Based on the economic data and the reports I?m hearing from the field, the perception of an endless economic funk is finally starting to dissipate," Guynn said.
But Guynn described the continued loss of jobs as a weakness of the economy although he said the labor market moving forward should improve slowly. He noted that losses now are concentrated mostly in manufacturing, which has suffered from structural changes that inhibit rehiring of workers.
Productivity gains have enabled companies to get more from existing workers, but Guynn said he believes that firms will face increasing pressure to hire as demand increases. "Just as the number of hours in a day is fixed, there's a limit to what firms can accomplish solely through improved productivity, especially during a time of rapid growth," he said.
The outlook for consumer spending remains positive and business spending has begun to increase, Guynn said. "Businesses have put behind them much of the hard work of restructuring and cleaning up balance sheets. Industry by industry, demand appears to be picking up and, even in the weaker areas, stabilizing."
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.