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Atlanta Fed executive offers limited economic hope for 2009

TAMPA — A top executive with the Federal Reserve said Tuesday he still expects the "tentative" start of economic recovery this year despite increasing anxiety.

"We will see at least the tentative signs of a recovery beginning in the second half of the year," Dennis Lockhart, president and CEO of the Federal Reserve Bank of Atlanta, said at the University of Tampa's annual Fellows Forum at the Tampa Bay Performing Arts Center.

Lockhart, speaking to an audience of about 700, also downplayed fears of rising inflation.

"If there's anything to be concerned about now, it's really the opposite: deflation," he said. "But I think neither deflation nor serious inflation is a serious concern at this point," noting that prices like energy are falling.

In other related topics, Lockhart said:

• Both the poor commercial real estate market and the spread of a global recession, particularly in Europe, could delay economic recovery until next year.

• The United States has "some months to go'' to stabilize the troubled banking system and will "very likely" inject more capital into banks.

• The weakness in housing starts "is probably a necessary evil" to trim the inventory of homes and purge the market of foreclosure properties. Though home prices are still falling, he forecast the housing market "forming a bottom" sometime this year.

• He was "quite disappointed" when the revised gross domestic product numbers for the fourth quarter came out showing that productivity slumped by 6.2 percent, nearly twice as bad as expected.

As a Reserve Bank president, Lockhart also sits on the Fed's policymaking body, which sets interest rates. When he was appointed to the job two years ago, he said he thought it would be a relatively "easy … make-a-few-speeches" role. "Little did I know what I was getting into," he said. "Turned out it's a real job."

The Fellows Forum is the flagship event for UT's board of fellows, held to strengthen ties between the university and the business community. Joining Lockhart on this year's panel were Patricia Martin, CEO and founder of marketing firm LitLamp Communications, and Thomas Kuhn, president of the Edison Electric Institute, an association of investor-owned electric companies.

Dennis Lockhart

Career: International banker with Citigroup stationed at points in Saudi Arabia, Greece and Iran; executive vice president of Heller Financial; managing partner at the private-equity firm Zephyr Management; professor at Georgetown University's Walsh School of Foreign Service; lieutenant in Marine Corps Reserve.

Education: Bachelor of arts in political science and economics from Stanford University; master's in international economics and American foreign policy from Johns Hopkins University School of Advanced International Studies.

Atlanta Fed executive offers limited economic hope for 2009 03/03/09 [Last modified: Tuesday, March 3, 2009 10:52pm]
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