Fed's Lacker says U.S. growth prospects improving

 @ibtimes on January 08 2010 3:48 PM

The U.S. economy is on much better footing despite a soft labor market and a rickety commercial real estate sector, Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday.

In prepared remarks to the Maryland Bankers Association, Lacker sounded increasingly positive about the outlook, and concerned about the inflationary potential of an ongoing rebound in activity.

During the recovery period ahead we may face an increasing risk of inflation edging upward, which has sometimes occurred during past recoveries, Lacker said.

While that risk appears to be minimal at this point, we will have to be careful as the recovery unfolds to keep inflation and inflation expectations from drifting around.

The U.S. economy expanded 2.2 percent in the third quarter following the worst recession since the 1930s. But the job market, while gradually getting less bad, has yet to show any sign of sustained hiring.

A Labor Department report on Friday showed employers shed another 85,000 jobs in December, disappointing economists who had expected payrolls to be unchanged last month.

Join the Discussion