June 11 (Bloomberg) -- Federal Reserve Bank of Atlanta President Dennis Lockhart said recent U.S. economic reports, including weakness in the labor market, indicate the recovery may be losing momentum after last year’s fourth quarter.
“The indicators of economic strength so far in 2012 have been underwhelming,” Lockhart said today to the Tennessee Bankers Association in Chicago in remarks repeating two speeches last week. “I expect the recovery process to be slow and drawn out. I think the most reasonable expectation is moderate growth, a slow and possibly halting decline of unemployment, with inflation staying close” to 2 percent.
Lockhart, who has a vote on the Federal Open Market Committee this year, reiterated his view that policy makers need to take further action to stimulate the economy if it becomes clear growth is slowing. Boston Fed President Eric Rosengren said last week the central bank has “some flexibility” for more easing, while Fed Vice Chairman Janet Yellen said that “stalled” improvement in the labor market and weak financial conditions could call for more accommodation.
The Atlanta Fed president told reporters after his speech he was going into next week’s FOMC meeting with an “open mind” to review the Fed’s “very thorough” staff analysis and other participants’ views, though he was not ready to back additional action today.
“I don’t think any of the options should be taken off the table under the current circumstances, but I am not convinced at this moment that the circumstances quite yet call for additional action,” he said.
Yields on U.S. Treasuries have fallen in response to the European crisis, with the U.S. seen as a “safe haven,” Lockhart also said. “It does in some respects take the pressure off to do something about financial conditions per se,” Lockhart said.
The unemployment rate rose to 8.2 percent in May from 8.1 percent in April, and the economy added 69,000 jobs, compared with a gain of 275,000 in January, according to the Labor Department.
Some change in communications policy by the Fed is another future option, with St. Louis Fed President James Bullard’s idea of a monetary policy report “a possibility,” Lockhart said. While the FOMC releases economic and interest rate projections of individual members, a “more holistic” communications on the economic outlook may be beneficial, he said.
Lockhart also departed from his written remarks to praise the Spanish bank bailout as a positive step though he said it didn’t change his overall view that the European crisis continues to weigh on U.S. growth.
The rescue is “good news and it alleviates slightly some of the concern,” Lockhart said. “Nonetheless, there are many issues ahead the Europeans are going to face.”
He told reporters later that markets were looking for more details on the bailout to review.
Lockhart, 65, a former Georgetown University professor, has led the Atlanta Fed since 2007. The Atlanta Fed district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee.