Oct. 19 (Bloomberg) -- Federal Reserve Bank of Atlanta President Dennis Lockhart said recent economic reports suggest the U.S. economy may be accelerating to a modest pace of growth and inflation may fall.
“Things kind of turned in the latter part of the summer,” Lockhart said in Atlanta. “Since October, we have seen for the most part economic indicators that have exceeded expectations. Now we appear to be on a growth path” of about 2 percent to 2.5 percent growth.
“I do not expect a double dip recession,” he said, adding that “modest growth” will probably continue into 2012.
Lockhart has supported the Federal Open Market Committee’s use of unconventional policy instruments at their last two meetings to revive a recovery that has left the unemployment rate stuck near 9 percent or higher for 30 consecutive months. In August the central bank pledged to hold interest rates near zero until mid-2013 and in September the Fed announced it would swap $400 billion of short-term debt for longer-term debt in a bid to reduce borrowing costs.
The economy has “been weaker than we originally thought” through August, he said. “We were seeing disappointments relative to expectations.” Given recent data, however, “some of the pessimism may be overdone,” and there is less likelihood of a recession.
His forecast means “no recession but at that growth track unemployment will come down very slowly,” Lockhart said at Georgia Tech’s College of Management in Atlanta. “Inflation has begun to subside” and will return to “a healthy level of inflation,” around 2 percent.
Lockhart also said the economy in the Southeast, including Atlanta, was lagging the national economic outlook partly because the region depends more on housing and construction.
Nationwide, economic growth picked up in the past quarter to 2 percent, according to the median of 78 economists surveyed by Bloomberg News from Oct. 5 to Oct. 11. Employment increased by 103,000 last month, and the jobless rate held at 9.1 percent, Labor Department figures showed Oct. 7.
--Editors: Gail DeGeorge, James Tyson
To contact the reporter on this story: Steve Matthews in Atlanta at firstname.lastname@example.org
To contact the editor responsible for this story: Chris Wellisz at email@example.com