Events

October 12, 2011

Soundbites

Federal Reserve leader offers economic perspective

Federal Reserve Bank of Atlanta President Dennis Lockhart talked about trust in the financial system, stimulus for the economy and why cash-rich companies aren't hiring in an Oct. 7 speech at Goizueta Business School. 

Lockhart was brought to campus by alumnus Samuel Jackson, founder and CEO of the Economic Empowerment Initiative and a member of the President's Advisory Committee on Financial Capability.

With financial capability as the theme, Lockhart described one major characteristic of a financially capable individual as someone who "participates in and trusts the country's financial systems."

"In the aftermath of financial crisis and recession, many have been discouraged and lost faith in the country's formal financial system," he said. "This is unfortunate but I believe the goal should be for everyone to operate within the formal financial system, for everyone to be banked as opposed to unbanked."

"Inadequate individual financial capability was a root cause of the financial turmoil crisis in 2008," Lockhart believes. "Many lessons were learned during that time by the Federal Reserve and others," he said, dividing the blame among homeowners, banks and lenders.

In the Q&A period, Lockhart said:

• He thinks inflation will subside this year and into next as commodity prices soften.

• "The economy is weak but not weakening; it's bumping along."

•  "We can't take any monetary policy off the table," like a third round of economic stimulus known as QE3.

• Among the key metrics the Fed follows is job losses. "Unemployment levels in the Southeast are a little worse than the rest of the nation and vary dramatically state by state."

• Educational institutions can emphasize soft skills as well as hard skills for jobs. Talking to hiring managers that week at the Kia plant in West Point, Ga., Lockhart said "what I found most interesting was they claim they did not focus so much on hard job skills but instead evaluated behavioral screens such as teamwork, reliability, getting to work on time, the ability to work with people."

• "Companies learned something during the recession — they learned they could operate with fewer people and get more out of equipment, software and workforce." While companies in general are very profitable, generating a lot of cash, they are also very cautious because there's lot of uncertainty in the air, particularly related to the European debt crisis.

• "There's a gap between workers skills and employers' expectations. A number of employers are looking for the perfect match. In a much healthier economy, they wouldn't have that level of selectivity."

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