U.S. economic growth could remain soft for some time but monetary policy may not be able to address the problem, Richmond Federal Reserve Bank President Jeffrey Lacker said Monday.
In a speech that focused primarily on the role of manufacturing in the U.S. South, Lacker's occasional nods to the national outlook were rather glum.
"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 in the face of rising demand," Lacker told a business conference.
May data showed employers added just 54,000 jobs, and the unemployment rate climbed to 9.1 percent.
It was a remarkably downbeat speech from the vocal inflation hawk, who until recently was predicting the U.S. economy might grow as much as 4 percent in 2011. Lacker said he was currently in the process of revising down his forecast.
Lacker, who opposed the Fed's $600 billion bond-buying stimulus launched in November, did not directly address monetary policy or inflation in his prepared remarks. But he told reporters after the speech that he did not believe more monetary easing would be appropriate.
"We ought to be very wary of thinking monetary policy is the right response," Lacker said.
Asked about inflation, Lacker said the stabilization of energy prices was encouraging, but policymakers should keep an eye on prices outside food and energy, which have been firming.
Lacker noted manufacturing had been a bright spot in the recovery, arguing that public policy should nurture the sector by making proper investments in training and education.
But his disappointment with the latest round of weak economic figures was palpable.
"The inability so far of the expansion to gain more traction has been frustrating," Lacker said.
He noted the strength in consumer spending at the end of 2010 had abated at the start of this year.
"The recovery that began in the second half of 2009 has been patchy and has yet to produce a sustained period of above-trend growth," Lacker said.
The U.S. economy grew an annual rate of just 1.8 percent in the first quarter.
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