–Does Not Expect a Double-dip Recession
–Fed To Act If There Are No Signs of Improvement In The Next Year
–Baby Boomer Generation Will be a Nightmare For the Younger Generation

By Forrest Burnson

SEWANEE, Tenn. (MNI) – Atlanta Federal Reserve Bank President
Dennis Lockhart Tuesday night expressed tacit confidence in the nation’s
economic recovery, while still warning of potential risks.

Despite a slowed pace of recovery, Lockhart said he expects to see
improved economic growth by 2011 and 2012. “I don’t expect a double-dip
recession,” he told reporters after a speech at the University of the
South in Sewanee, Tennessee.

Though he believes the U.S. is poised for recovery, Lockhart told
audience members that the world’s financial market is becoming
increasingly multipolar.

“You can expect a gradual reduction in the dollar’s role as a world
reserve currency,” he said.

While Lockhart believes that the economy will experience improved
growth in the next couple of years, he maintained that if the economy is
the same six to twelve months down the road, then the Federal Reserve
will be “comfortable taking action.”

Lockhart also noted problems that the nation will face in the
future.

“The baby boomer generation will be a nightmare for the younger
generation entering the workforce,” said Lockhart, in response to an
audience member’s question about the role demographic shifts take in the
Federal Reserve’s forecast of the national economy.

“We have to tackle entitlement spending,” he added.

Though Lockhart must rely heavily on data to formulate policy
decisions, he said that anecdotal stories about the economy play a
significant role in shaping his overall outlook on the nation’s
progress.

He discussed the effect that the BP oil spill had on consumer
spending, noting that the CFO of Home Depot reported dramatic increases
in sales the weekend after the well was capped. “That told me that
people were holding back, and that one more unusual piece of news is
enough to halt spending,” he said.

Rising gold prices are also an indicator of the public’s
uncertainty over the economy as people choose to hedge against
currencies, Lockhart told reporters.

The political atmosphere in Washington is also playing a role, as
the midterm elections have halted progress on key economic issues.
“[Those issues] are going to have wait until after the elections,” he
said.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$FX$]