ST. LOUIS - St. Louis Federal Reserve Bank President James Bullard said the weaker-than-expected pace of job creation reported last month has not changed his outlook for the economy, even as many worry about what disappointing employment numbers mean for the recovery.

Bullard also took issue with the declared expectation by the Fed's policymaking Federal Open Market Committee that economic conditions are likely to warrant low rates through late-2014, saying the Fed is "overemphasizing" its ability to communicate its way to easier policy.

"The report was mediocre but it's just one piece of data in a larger mosaic," Bullard told reporters during a press conference before the start of the 2012 Homer Jones Memorial Lecture hosted by the St. Louis Fed.

"I don't think it changes the outlook appreciably. A lot of the recent jobs data has been revised upward," he said.

Bullard said he thinks the unemployment rate "will continue to tick down," and "the most likely outcome is for sustained growth and a further decline in unemployment."

The economy does face a risk from high energy prices, although Bullard he does not believe gasoline prices are currently "a big drag" on growth.

"But there's a risk that they'll go higher because of a wild-card situation with Iran," he said.

Bullard said he is forecasting 3% economic growth this year, and while it is not a huge number, he noted that it sounds optimistic "given that six months ago a lot of people were forecasting recession for the U.S."

As for recent inflation, with both headline CPI and PCE, year-over-year above the Fed's 2% target, he noted that both measures have been moderating in recent reports, "so I think we're OK on that dimension, at least for right now."

Bullard again criticized the late-2014 calendar date in the FOMC statement, arguing that "by saying we know what's going to happen three years in the future, I think we're overstating our ability to forecast, and it's sending a pessimistic signal.

"It's saying the U.S. economy is going to be in a weak state three years from now," he said. "Everyone knows that as the economic situation changes we're going to have to move that date around.

"It's pretty questionable whether you can commit that far in the future," Bullard added, "I think we're overemphasizing our ability to communicate our way to easier policy."

Despite his apparent disagreement with this decision by the FOMC, Bullard noted in his opening remarks to introduce the lecture's featured speaker, PIMCO's Mohamed El-Erian, that "The Fed's ability to absorb and be open to multiple viewpoints helps prevent groupthink and leads to superior monetary policy and, ultimately, to better macroeconomic performance."

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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