ROANOKE, Va. — Federal Reserve Bank of Richmond president Jeffrey Lacker Monday said there is a possibility economic growth in the United States might be below trend for a sustained period, as many businesses remain reluctant to increase their workforce — despite rising demand — due to uncertainty about the strength of the recovery.
In remarks prepared for delivery at the Southern Growth's 2011 Chairman's Conference in Roanoke, Va., Lacker did not comment on current monetary policy, instead focusing primarily on the evolution of manufacturing the South.
He did give his views on the state of the economy. After the speech, however, he told reporters: "We ought to be very wary of thinking monetary policy is the right response.
"The recovery to date has been tepid at best," Lacker said, noting that since it began in the second half of 2009, it has yet to produce a sustained period of above-trend growth.
He added that while last year ended with household spending showing renewed strength, that strength abated early this year.
"Although the factors affecting the first-quarter slowdown — including high energy prices, bad weather, and natural disasters around the globe — may prove temporary, the inability so far of the expansion to gain more traction has been frustrating," Lacker said.
"One striking observation that may be relevant to the possibility that growth underperforms for a sustained period is the apparent reluctance of many employers to add workers," he said.
