Economic growth and relatively steady hiring have not yet eliminated the “slack” in the labor market, said Dennis Lockhart, president and chief executive of the Federal Reserve Bank of Atlanta.
That slack – in the form of many Americans out of work and many others taking part-time jobs when they cannot find full-time work – is the explanation for a “puzzle” in the data, said Lockhart, speaking at the annual meeting of the Council for Quality Growth.
“I don’t think we are yet able to claim ultimate employment victory,” he said.
Unemployment rates have been higher in Georgia since the onset of recession in late 2007.
Despite that, Lockhart told reporters after his speech that he is not concerned “to a significant degree” about the economic health of the region and state.
“Atlanta is showing positive momentum and positive strength,” he said. “The arrows are pointed in the right direction.”
Generally, a slide in unemployment rates combined with decent job growth point also mean at least modest inflation. That typically happens when employers need to start bidding up wages and salaries, while the higher buying power of consumers gives businesses a chance to raise prices.
Not so far, Lockhart said: The improved economy of the past several years has not yet pushed “core” inflation even to the Fed’s 2 percent target.
Until that happens, the Fed is inclined not to lift the benchmark interest rates that it controls. Those rates generally shape mortgage and other borrowing rates, so they are critical to how much consumers spend to borrow money and companies spend to invest.
While he is optimistic about growth, Lockhart said he doesn’t expect the Fed to raise interest rates until the second half of next year at the earliest.
