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Lockhart believes the economy will pick up

The president of the Federal Reserve Bank of Atlanta Dennis Lockhart believes that the United States economy will pick up the pace in the second quarter. He also thinks that raising interest rates in the June to September window is still realistic. As Lockhart was discussing the factors that are putting a downward pressure on the economy he said it “contributes to a situation of some ambiguity at the moment, but I do this this will pass.” This is extremely important because Lockhart will be a voting member of the Fed committee that sets the monetary policy. He also thinks the labor market is still looking up, noting that there was not a large amount of slack in the market.

During a speech in the evening on Monday, the Fed Vice Chairman Stanely Fischer said he thought the unemployment data to be more reliable than other measures of economic output such as domestic product. Mr. Lockhart said, “I take the point that our measurement of employment is methodologically probably a bit more precise, such as it is, than ot measurement of output. I think that does… suggest to me that, as we are looking at the data in a data-dependent mode over the coming weeks and months to make possibly a decision on (interest rate) lift –off, that focus on what’s happening in the employment numbers will be very important.”

He continued to comment on the regulator policy, saying he thinks the provision in the 2010 Dodd-Frank law, which calls for stricter supervision of banks with more than 50 billion dollars in assets, should be changed. Mr. Lockhart spoke at a conference on “shadow banking” and noted that when he deliberates about dangers in the non-bank sector he is more worried with the likelihood of bank-like runs or other forms of instability at money-market mutual funds and broker-dealers. What do you think about Mr. Lockhart’s statements? What does this say about the Fed?

<a href=””>WSJ article</a>


  1. moorem15 moorem15

    I think that his comment about employment numbers being more reliable indicators of the economy than other economic outputs to be very interesting. Percent unemployment does seem to be approaching natural levels, but I have read articles elsewhere that suggest that employment statistics can be misleading, as it incorporates part time employed (currently at record high) and does not include many working age people that have left the job market.

  2. Christian von Hassell Christian von Hassell

    At this point, the most welcome labor statistic to me seems to be a growing labor force. As people move back in, we reduce slack and can finally start creating some natural inflationary pressures.

  3. Stephen Moore Stephen Moore

    I am not as confident about an interest rate increase in June is realistic. While labor statistics have been positive, inflation measured by the personal consumption expenditure index has not been as optimistic. Inflation may have risen in February, but is still below the Fed’s target of 2%. I’d look for an interest rate raise in September at the earliest.

  4. grieve grieve

    Instead of looking strictly to unemployment, I think the actual employment rate would be a better indicator.

    • That is what I track. Slow improvement, but still about 6 million jobs shy of normal.

      As to regulation, we need to worry about both shadow banking and large banks, because the latter are heavily involved in trading and derivates, including transactions where shadow banks are the other side of their deals. We’ve allowed lots of new products and it’s clear that Wall Street doesn’t understand many of them, but as long as they pay fees up front, they’ve nothing to lose. We do.

  5. winn winn

    Would Mr. Lockhart’s comments be as ambiguous and strictly-worded as the Federal Reserve’s statements? How common is dissent within the national structure, and would it weaken the Federal Reserve’s ability to provide credible commitment?

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