published Wednesday, October 19th, 2011

Bernanke defender sees positive signs

The sluggish economic recovery should gain speed in the second half of 2011 and perform better than many now expect, a leading central banker told a Chattanooga investment group Tuesday night.

Dennis Lockhart, the president of the Federal Reserve Bank of Atlanta, told the CFA Society of East Tennessee that he doesn’t expect the economy to sour into another recession unless there is an economic crisis in Europe or a fiscal stalemate in Congress.

“We see a slowly growing economy and there is a chance of that growth accelerating,” Lockhart told the group.

Lockhart conceded that Fed officials were surprised by the lackluster pace of the recovery during the first quarter of the year. The Fed’s easy monetary policy produced only an anemic 0.4 percent growth in the nation’s economy.

But the Atlanta Fed president said “recent economic data are mostly directionally positive and have mostly exceeded expectations.” Lockhart cautioned his Chattanooga audience of bankers and chartered financial analysts not to bank on “pockets of pessimism” that could prove self-fulfilling.

“Let’s not talk ourselves into believing that enduring weakness or recession is inevitable,” he said.

Nonetheless, Lockhart said he expects economic growth pace of 2.5 percent or less will not quickly lower the U.S. unemployment rate, which has remained at or above 9 percent for 30 consecutive months.

“The real picture is a low and slow growth,” he said.

Lockhart blamed the sluggish pace of the economy to uncertainty fueled by unprecedented fiscal challenges in the United States and sovereign debt problems in Europe.

Such challenges have led the Federal Reserve to take unprecedented steps to signal that interest rates will be kept low through 2013 and to expand its own balance sheet to boost the money supply.

The Federal Reserve System has come under increased congressional and public criticism for its efforts to jumpstart the economy. The leading Republican presidential candidates have all said they want to replace Federal Reserve Chairman Ben Bernanke, claiming the central bank is risking inflation.

Lockhart, who next year will become one of the 12 voting members of the Fed panel that sets monetary policy for the U.S. government, defended the Fed’s accommodative monetary policy and the actions of Fed Chairman Ben Bernanke.

“We’re in a more politicized environment where there is more criticism of the Fed and its chairman,” he said. “But I don’t think those criticisms, especially of Chairman Bernanke, are evenly remotely justified.”

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
GlacierClipper said...

Positive signs will surely be seen if Obama and his appointees become jobless in 2013. Hopefully they will get their pink slips in November 2012.

This Obama Administration and it's policies are wrecking the foundation and cornerstone of this nation.

The recovery will take years.

The entire Washington DC establishment can be blamed for some of these issues also.

October 19, 2011 at 12:20 a.m.
nucanuck said...

Lockhart is selling optimism, not reality. The developed world is in an inter-connected debt and banking crisis that is worsening by the day. 2008 was round one after which we failed to reign in the financial system. Excessive leverage, and mountains of debt are crushing the weaker players first, but the rot goes all the way to the core.

Our politicians are trying gamely to find ways to buy time, hoping that we can "grow" our way out of the crisis. Unfortunately the old tricks aren't working, the hole is too deep. Instead of helping, the measures have created far more debt and even some bookkeeping maneuvers that should warrant jail time.

The Fed has forced artificially low interest rates during the government debt run-up and now cannot afford to raise rates to a normal level. Desperate measures have made us more desperate.

Mr Lockhart's assesment that things are turning up is likely to be wrong by 180 degrees.

October 19, 2011 at 1:01 a.m.
onetinsoldier said...

Just like in the game of monopoly, when someone has all of the money and property, the others players lose interest because any attempt to play becomes a futile attempt that ends in paying more rent. Our economy will remain SICK as long as the same game continues to play on.

October 19, 2011 at 1:45 p.m.
librul said...

People like Glacierclipper show utter idiocy by trying to blame the current situation solely on the Obama administration. Things went sour and the world economy was teetering on the brink by November '08 while the "all hat no cattle" fratboy war criminal was at the helm. Since then the nation has floundered because of Rethuglican do-nothingism marked by the most disgusting display of arrogance, selfishness, racism and faux patriotism to ever poison American discourse.

Obama's failure - abject failure - has been showcased in his abandonment of the campaign promises made to a yearning majority of Amercians who swept him into office. This along with his curious lack of spine in standing up to the thugs across the aisle and the thieves on Wall Street should be most troubling to the DNC as the election approaches since they make it impossible for many among the yearning masses to vote for him - regardless of the consequences a neo-fascist takover of our damaged republic might bring. Those willing to fight for economic justice carry signs for now. That could change.

October 20, 2011 at 12:14 a.m.
please login to post a comment

Other National Articles

videos »         

photos »         

e-edition »


Find a Business

400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.