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September 10, 2007

Fed official: Maybe home woes DID hurt wider economy

ATLANTA, Sept 10 (Reuters) - Atlanta Federal Reserve Bank President Dennis Lockhart on Monday stepped back from his assertion last week that housing woes had so far not clearly affected the broader economy, but said weak jobs data should be evaluated in tandem with strong retail sales.

"Friday's data ... show employment was beginning to soften back in June. This news should be evaluated with recently positive reports in retail sales," Lockhart told a business group.

On Thursday, Lockhart said data had not provided conclusive signs that housing problems were spilling over into the broader economy.

However, Lockhart amended his remarks on Monday to say he is now processing new information and other timely data as he prepares for the U.S. central bank's Sept. 18 rate-setting meeting.

On Friday, of course, the Labor Department said that the number of jobs in the U.S. economy had fallen by 4,000 in August. How's that for "other timely data"? Economists had expected a gain of 100,000. Lockhart is pointing to strong retail sales last month, but these were driven by heavy discounting by Wal-Mart, Target and others, so they may indicate less strength than he thinks. There'll be a rate cut next week, no doubt.

Posted by Jay Hancock at 1:45 PM | | Comments (0)
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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