Dennis Lockhart, president and chief executive officer of the Federal Reserve Bank of Atlanta, said the 18-month-old economic recovery gained momentum heading into 2011, but could be restrained by uncertainty.
Ongoing credit market repair, consumer spending, and the interplay between household finances and the housing market are all being held back by uncertainty, according to a text released Monday for a Lockhart speech.
He expressed support for the $600 billion Treasury Department securities purchase plan, which represents the Federal Reserve’s second round of quantitative easing, widely referred to as QE2.
“I made the decision to support that policy, and I remain comfortable with that decision,” Lockhart said. “I saw these purchases as support for a shaky recovery and insurance against serious downsides.”
He described the recovery as “bumpy” and said it survived in “an air pocket” in the middle of 2010 after inventory rebuilding, the pickup in international trade, and the satisfaction of demand deferred during the recession had played out.
“The economy seems to have gained durable momentum as we begin 2011,” Lockhart said.
He noted that growth accelerated in the fourth quarter and the Jan. 7 employment report suggests expansion is continuing at a modest pace. The data indicated 103,000 jobs were created in December.
However, the U.S. economy needs to create 115,000 to 125,000 jobs each month to make room for new workers joining the national labor force, noted Anthony Chan, chief economist for JPMorgan Private Wealth Management.