NORMAN, Okla. - Dallas Federal Reserve President Richard Fisher Tuesday said March's disappointing jobs report has not altered his outlook for U.S. economic growth, although it does mean he will keep a closer eye on how the economic recovery progresses.
Speaking to reporters following a presentation at Oklahoma University's Price College of Business, Fisher also said many business leaders he speaks to are against additional monetary stimulus by the Fed, fearing soaring inflation down the road.
Asked for his reaction to a jobs report that showed only 120,000 jobs added last month -- far short of expectations -- Fisher cautioned that "you don't make decisions based on one data point."
While the report is not insignificant, "it's not all-determining," Fisher stressed. "We have to look at the trends, discern what the weather pattern impact was in the first couple months of the year."
Fisher said the March employment data had not changed his outlook for the economy, although "this means I'm going to be a little more watchful."
Taking questions from the audience after his presentation, Fisher said there is a real concern among his contacts in the business world that with the Fed's bloated balance sheet, "we are just a little bit of an ember in what could become an inflationary fire."
"To a person that I speak to, I am pleaded with; 'Please no more liquidity, we're fearful that you are planting the seeds of inflation long-term,'" he said.
And although the Fed can influence employment, "it is ... not sufficient," he said.
"Our businesses are very lean and muscular," Fisher argued. "They have access to money and are ready to go."
He pointed to some growth in final demand in the U.S., driven by an unemployment situation that has gotten "fractionally better."
It is on the cost side that businesses are feeling "the squeeze," Fisher told reporters.
"I am beginning to hear that there are concerns about cost-push pressures. They don't have the pricing power that they would like," he said.
As a result, Fisher said he is closely monitoring inflation levels, and that he sees the trend in the direction of the Fed's 2% target and not a lower level.
Fisher said he also remains concerned about the impact of higher energy prices, although it has yet to actually impact consumer behavior.
He said research by his business contacts have found that "the customer is a little more confident, more of them have jobs ... with that comes increasing confidence. And they (businesses) just have not yet seen the impact they expected at these gas prices."
And while low natural gas prices has offset some of the adverse effects of higher gasoline prices, Fisher said it remains an uncertainty that has businesses worried.
"I am concerned about it from the standpoint of how it might dampen final demand and yet, we haven't seen it bite yet," he said.
On Europe, Fisher told the gathering that U.S. financial institutions' exposure to the sovereign debt crisis and resulting financial market turmoil in the Eurozone "has been significantly reduced."
"I'm less worried about that than the common market chatter," he said.
U.S. financial institutions have adjusted, Fisher said, while the situation for their European counterparts has been "somewhat alleviated" by the European Central Bank's liquidity injections and the efforts of EMU authorities.
"We'll see how much time has been bought and how that all comes out in the end," he said.
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