“The economy is throwing off mixed signals,” Lockhart said Tuesday at a dinner meeting of the World Affairs Council of Jacksonville at The River Club.
“We have weak first-quarter growth and at the same time strong labor market data and indications that inflation is firming,” he said.
The U.S. gross domestic product grew by just 0.5 percent in the first quarter, the U.S. Bureau of Economic Analysis reported last week.
Lockhart was hoping to see better economic growth in the first quarter this year because indicators of household wealth were looking up.
“We were expecting solid growth of domestic demand fueled by strengthening consumer spending. So far this year, we’ve been disappointed,” he said.
“In spite of the first-quarter estimate, I haven’t revised my view that the economy is growing at a moderate pace. For now, I’m sticking with my forecast that growth will be stronger over the rest of the year. The fundamentals look solid for consumer activity,” he said.
Lockhart’s more optimistic view is at least in part due to the Atlanta Fed’s “soundings” of business leaders in the Southeast, which have been “more upbeat than the recent GDP number,” he said.
After the meeting, he told reporters that Jacksonville business leaders are expressing the same view.
“There’s a little bit of a disconnect between what we hear and what the growth numbers indicate,” he said.
“Business leadership (in Jacksonville) is not euphoric but basically seeing the economy as steady and on balance cautiously optimistic,” he said. “They’re not describing a half percent growth world.”
As one of 12 regional bank presidents in the Federal Reserve System, Lockhart is a member of the Federal Open Market Committee, the policy-making group that determines the direction of U.S. interest rates.
However, he is not currently a voting member, as five of the 12 bank presidents are voting members on a rotating basis, along with the seven governors of the Federal Reserve Board.
Still, Lockhart’s public statements are watched closely in the financial world for indications of the Fed’s thinking, and his talk in Jacksonville drew reporters from the Wall Street Journal, Reuters and Bloomberg News.
Because of that, Lockhart was cautious with his remarks and didn’t want to make any predictions on what the FOMC will do with interest rates at its next meeting in June.
“I’m not going to take a position tonight on that question. The policy path will depend on how conditions evolve between now and mid-June,” he said.
“At the moment, the data, overall, are ambiguous. As a policymaker considering whether to hike interest rates, I’m ambivalent at this point.”
The recent U.S. economic numbers have not looked good but Dennis Lockhart, president of the Federal Reserve Bank of Atlanta is a bit more optimistic than the data would indicate.