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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (32450)	7/16/2010 7:57:57 AM
From: Hope Praytochange	Read Replies (1) \| Respond to of 103300

Fed's Lacker: Consumer Spending, Business Investment To Slow 07/16 07:36 AM (This article was originally published Thursday.) By Darrell A. Hughes Of DOW JONES NEWSWIRES NORFOLK, Va. (Dow Jones)--Federal Reserve Bank of Richmond President Jeffrey Lacker said Thursday that consumer spending and business investment will slow to a "pace that is less robust than has been typical of past recoveries." The Fed official, however, remains optimistic and still believes there will be enough spending and investment to support some growth. Lacker spoke to business leaders in the Hampton Roads region, and suggested it's wise to not overreact to "crosscurrent" in economic data. "I would not be surprised to continue to see somewhat choppy economic reports for a time," he said, adding "this pattern is not at all inconsistent with moderate growth." Despite acknowledging a slower growth pace, Lacker projected increased spending for business equipment and software this year and beyond, primarily attributable to stable sales in the technology sector. "As a result, there's an array of opportunities to deploy new capital to improve business processes," he said. Lacker's comments come on the heels of disappointing economic data released this week showing the economy may be faltering. According to minutes from the latest Federal Open Market Committee meeting released Wednesday, officials downgraded their growth outlook, projecting that gross domestic product would expand between 3% and 3.5%. While Lacker isn't a voting member of the interest-rate setting committee this year, he remains influential on some policy decisions. On inflation, barring unforeseen shocks, Lacker anticipates an "upward drift" in coming quarters. "The stability of inflation implies confidence that the Federal Reserve will act to keep inflation low and stable as the recovery continues and the economy improves," he said. The Fed has been holding interest rates at around 0%, and Lacker has said he's comfortable with this policy. When the central bank does move to tighten policy, Lacker said it'll be straight forward; sell assets, shrink the Fed's balance sheet and raise the level of short-term interest rates. The problem is acting too soon. "Recognizing the right time to begin normalizing our monetary policy settings is going to be hard," Lacker said. He added, "For my part, I will be looking for the time at which economic growth is strong enough and well enough established to warrant raising our policy rate." Lacker expressed concern that measures within financial legislation passed by Congress could pose "significant challenges" to some banks. Lacker described the financial overhaul bill as "huge," drawing laughs from a crowd of business leaders in the Hampton Roads region. Lacker, responding to a question, said Fed officials are in the process of going through the legislation with a "fine tooth comb." Lacker was also asked about the potential of double-dip recession and said that's "quite unlikely." The Richmond Fed president spoke to reporters after giving an economic outlook to business leaders. Lacker told reporters he lowered his growth projection to 3%, but declined to give his previous projection. On interest rates, Lacker said he would like to see "sustained strength in final demand" before he throws support behind shifting rates upwardly. -By Darrell A. Hughes, Dow Jones Newswires; 202-862-6684; darrell.hughes@ dowjones.com