Rising gas prices likely weighed on first quarter U.S. economic growth, the head of the Federal Reserve Bank of Atlanta said Monday, while another central bank official said companies are still reticent to hire.
Dennis Lockhart, president and CEO of the Atlanta Fed, said first quarter growth will likely be “soft” compared to modest growth many forecasters expected at the beginning of the year. Given continued instability in the Middle East, Lockhart said he “wouldn’t be surprised to see elevated fuel costs for some time.”
For now the economy is “coping” with high energy and fuel costs, but Lockhart, warned that if oil prices rise above $150 per barrel and stay there it could create recessionary forces.
Dallas Fed chief Richard Fisher said Congress appears to be getting serious about controlling spending, but companies want more clarity and to see sales rise before broader investing in new hiring. Lockhart and Fisher spoke Monday at the World Affairs Council of Atlanta's gathering at Georgia State University.
Fisher, a policy hawk, repeated warnings about government spending and stimulus efforts leading to inflation. He also said higher energy prices can trigger inflation.
During the panel discussion, Fisher said despite becoming more efficient during the Great Recession, companies are gun-shy to hire because of questions including sustainability of sales growth, tax policy and government deficits.
The economy has added jobs back in recent months. Unemployment for March dipped to 10 percent in Georgia, from 10.2 percent a month earlier. The national rate in March was 8.8 percent.
“They’ll only add jobs when they can see the whites in the eyes of demand,” Fisher said of American businesses.
Fisher said the nation’s workforce must compete with other nations whose workers are better trained, citing Germany, whose employment situation has improved faster since the recession, thanks in part to its manufacturing sector. Long-term unemployment also has eroded skills for many American workers, he said.
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