Atlanta Fed chief says persistent inflation not in the cards

Will metro Atlanta be able to narrow the gap between its above-average unemployment rate and the nation’s anytime soon?

Dennis Lockhart

Dennis Lockhart

Is persistent inflation about to raise its ugly head, fueled by gas prices?

Are we headed for another recession or serious slowdown?

No — on all counts. That’s what Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told me when I sat down with him last week.

“Atlanta continues to recover at a pace slightly lagging the national economy,” said Lockhart, who has headed the Fed’s six-state southeastern region for the last four years. “We haven’t discovered oil under Atlanta that creates a … driver that’s unconnected with the broader economy.”

So like the nation, Atlanta is stuck with slogging through this economy, making “gradual” improvements over the next few years, Lockhart said. But Atlanta has a steeper climb, since its jobless rate is 9.8 percent, while the nation’s is 9 percent.

Why is that, Mr. Lockhart?

In a nutshell, he said, what drove the metro economy over the past few decades — millions of people moving here to buy homes, take out mortgages and construction loans, occupy office buildings and fuel retail — came to an end when the financial crisis hit. Miscalculations that the good times would keep rolling caused excessive lending and overbuilding, which aggravated the problem.

Turning to inflation, Lockhart, 64, said he knows rising gas prices have alarmed people. They’ve also caused him to look at key price data every day to determine whether fuel price increases will lead to “broad-based, persistent inflation.”

What data does he look at?

The Atlanta Fed’s “sticky price” index, of course.

What’s that?

To determine whether volatile energy and food prices are driving lots of other goods and services higher, he looks at items whose prices only move periodically. They include the price of a home pest-control contract, cable TV services and laundromat costs. His conclusion — overall price pressures are “fleeting.”

If inflation will not be a major issue, how about a third round for the Fed to buy government bonds, called “quantitative easing,” to continue stimulating the economy when the second round ends next month?

Lockhart did not think that was in the cards, adding that “solid private sector strength is developing.”

Still, he believes it will take another three years just to get back to the pre-recession employment levels of 2007. And he does not subscribe to the Wall Street vs. Main Street view of what’s been happening.

“I don’t see this is as a question of two worlds — one as the adversary of the other,” he said. “They’re very much tied together.”

With all due respect, I disagree. They may be tied together, but they’ve been pulled in opposite directions.

Wall Street, big company bottom lines and CEO paychecks seem to be doing fine. Many on Main Street, smaller companies, middle-class workers, the unemployed, those who’ve lost their homes or struggling to keep them — not so fine.

In my mind, it has been a question of two worlds. The government, including the Fed, did a lot more to protect the big fish than the little ones.

- Henry Unger, The Biz Beat

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35 comments Add your comment


May 10th, 2011
7:17 am

Hey Henry,
If you believe inflation won’t keep rising, I’ve got a nice car I’d like to sell you. Only driven to church on Sundays by my little old granny.


May 10th, 2011
8:42 am

Atlanta is dead. Too much crime, lousey highway network, a mass transit system that stinks, way too many houses sitting empty. The growth has stopped…smart people are going elsewhere.

GOP Cannon

May 10th, 2011
8:48 am

I’d like to go elsewhere, but if you own a home in ATL you are screwed… good luck selling your house!


May 10th, 2011
8:55 am

Atlanta is really losing out. Im trying to run for the hills as well because this ship is sinking fast.


May 10th, 2011
9:06 am

I hope the you “run for the hills” shrills do exactly that very soon, except please don’t stop running until you are out of the state. We don’t need more trash in our Georgia hills.

Monroe Burbank

May 10th, 2011
9:24 am

Republicans have been in control of our state for how long now? And this is what we get? Here’s a big HATS OFF to the politicians and their constituents who voted them into office. Thanks to all!!!!!

EJ Moosa

May 10th, 2011
9:26 am

One does not need to discover oil under Atlanta to see job creation.

It needs to have the businesses of Atlanta retain to sustainable profit growth. The state of Georgia and the city of Atlanta should be doing what they can to lower the cost of doing business in the metro area.

Instead we have more corporate and business taxes on the way.

EJ Moosa

May 10th, 2011
9:27 am

And Monroe,

these are not true conservatives running the state. Most were democrats before they became republicans, including the current governor.


May 10th, 2011
9:36 am

What are they doing to fix the problems other than their “Pledge to America” nonsense AGAIN.


May 10th, 2011
9:37 am

Lowering the cost of doing business in a state does not work. If that were true then everyone would be moving to hotbad states like South Dakota. Business are not relocating anywhere now because of the economy and lowering the corporate tax rate is not going to help.


May 10th, 2011
9:39 am

Monroe seems determined to establish a cause-and-effect relationship between Atlanta’s economic woes and the Republican party. Notice that Henry’s posting focuses on Atlanta–not Georgia.

So which party predominately runs governments in Atlanta? Is Mayor Reed a Republican? How about Shirley Franklin? Or Bill “Just Released” Campbell? Maynard Jackson?

Rather than taking that old, tired stick out of the drawer to beat people you don’t even know, why not offer a solution or two as EJ Moosa did.

Mayor Reed seems to be working to get pension and other costs under control which may stave off certain future tax increases.

But I’d be curious to hear whether you have even a single suggestion. Or is it just the stick?


May 10th, 2011
9:42 am

As information, South Dakota’s unemployment rate is 5.5% as of March, 2011.

5.5% < 9.8%.


May 10th, 2011
9:57 am

Republicans and Democrats are like humans and pigs in Orwell’s Animal Farm.

You can look from one to the other, back and forth, and not see the difference.


May 10th, 2011
10:01 am

I moved here from the Balt/Wash area in 97 and bought my first house in 2001. In 2006 i sold the house on the bubble and bought one on the bubble(reynoldstown beltline)..a trade up if you will. in 2008, i bought another house under the bubble(NW ATL beltline). in 2009, i took an early retirement from a large ATL company and today i have positive cash flow from the rental and run the streets of this great city all day. Folks, only in this town can one pull this off. If i stayed up north and would be working my 44yo arse off. Its not all bad here in the ATL….sell your cars and move into town!


May 10th, 2011
10:02 am

Low taxes, access to an educated & motivated workforce, quality of life for their employees, where the CEOs & their spouses want to live, all these contribute to where companies move to. We all have to be concerned that ATL could be the next Detroit. We’ve lived here all our lives but would leave in a minute if we could sell our house and afford to move. Its not that bad where we live right now, but as they say, “The trend is not our friend”…


May 10th, 2011
10:07 am

RGB: Are you serious about that?? The place has a state population of 800K for goodness sakes! There are more people than that in Cobb county! You are proving the point not disproving it.

And by the way, it’s the state that’s the driver in bringing business in, not the city.


May 10th, 2011
10:08 am

@ Monroe I am always amazed at how Dems and Libs are the first to call out Republicans for being at fault for the current developments because they are in charge, but the Presidency and the Congress are still blaming Bush even though they have been in charge of Congress for four years before the recent election and the Presidency for 2 1/2 years…and in pretty much all statistics indicate that things have gotten worse in that period. Are things acting like they are improving, yes some, but if the Republicans had retained the Presidency isn’t it equally likely that in 2 1/2 years things would start to improve also?

Cobb Woman of Color

May 10th, 2011
10:33 am

Headline today…

Area’s growth stirs water worries

Metro Atlanta added 1 million people over past decade, but water — or lack thereof — could limit its future growth.

If the future growth is limited and there is a referendum on building homes, then maybe, just maybe, the glut of homes will be sold.

Unless Georgia (snicker, snicker) is successful in getting the state line moved and and can tap into the water of Lake Nickajack.

Booger Fling

May 10th, 2011
10:36 am

RambleOn84 – “Republicans and Democrats are like humans and pigs in Orwell’s Animal Farm.
You can look from one to the other, back and forth, and not see the difference.”

Absolutely correct… Many on here are fighting battles everyday in an attempt to boost their parties status in the great debate. All the while the puppet masters that control these people are sitting back and reaping the rewards. The left/right paradigm was established to divide the country. Most people are just to caught up to realize it.


May 10th, 2011
10:42 am

Georgia will go down even more when the new immigration law passes and thousands of immigrants leave this state (bad press, etC). Thanks Republicans for ruining GA


May 10th, 2011
10:46 am

Atlanta generally refers to the Atlanta MSA which is 20 counties and Atlanta the city contributes only 10% of the overall population so you’re giving Reed and his predecessors far too much credit for our woes.

Highly Republican counties are all part of the MSA and it is the state in the end that drives whether or not businesses come to GA and to Atlanta. Duluth could only hand so many bags of cash to NCR before the state had to step in and hand them a hundred million or more to bring over a few hundred lowly ATM assembly jobs and back office functions that’ll be gone as soon as the tax handouts expire.

Ask yourself why wouldn’t the NCR CEO relocate to Atlanta, if our wonderful cost of living and low taxes would have him keep more of his 7 figure bonus and fewer miles on the corporate jet?

GA never had the natural resources of places like SD so our state should have been looking to cultivate new industries long before all our carpet mills vacated. The city has pushed for mass transit and been stalled by the exurbs who insist on building distant McMansions for people earning 30k as long as they enjoy 2hr commutes. Despite massive corruption around concessions/contracts, the airport drives plenty of business to the city/state and has been a huge driver of growth for the region. What has the state done besides building more highways, throw tax money at loser companies, make HOPE an upper middle class lottery giveaway, and look for end runs around public schools?


May 10th, 2011
11:14 am


you are not very smart. Atlanta means metro Atlanta in this blog.


May 10th, 2011
11:21 am

Good for Georgia, this racist state doesn’t deserve jobs!

Boogey Man

May 10th, 2011
11:25 am

Atlanta is a sinking ship. Dallas, Austin and Charlotte are the rising metros.


May 10th, 2011
11:31 am

If Atlanta is sinking that means Georgia is really going down the drain! Atlanta is carrying this broke state without it it would fall in the line with Mississippi and Louisiana. The Republicans here think that since they have money that it will hold them over but they will soon see. I can’t wait until they pass HB 87, so they can really have something to cry about.

Progression and growth doesn’t fit in the State of Georgia nor Atlanta. You can say how much you Welcome immigrants but you really don’t, you just want to use them. Companies will find States and Cities, that are actually “friendly” and not trying to pretend as long as there is something to gain.

Good riddance Georgia and Atlanta and I hope that all the jobs eventually leave you.


May 10th, 2011
12:00 pm

“Turning to inflation, Lockhart, 64, said he knows rising gas prices have alarmed people.”

Prices for nearly everything, not just fuel, are rising across the board. Wendy’s e.g. announced today they’re raising their food prices. What’s up with these Fed guys. Are they just burying their heads in the sand in denial, or is this “there’s no inflation” mantra a choreographed response directed by Bernanke.


May 10th, 2011
12:05 pm

KD, you brought up South Dakota–and then denounced the example. Go figure.

Alphare, I’m simply making the distinction that Atlanta isn’t all of Georgia. Savannah, for example, has a much lower unemployment rate. And there are Republicans and Democrats there.

The earlier poster tried to say that Atlanta’s woes were the Republican’s fault when as everyone knows the entire nation is in an economic quagmire. Our problem is national in scope and state Republicans (who are mostly Democrats who changed uniforms as EJM pointed out) won’t be our saviors.

Did you miss that point, Alphare. So who’s not smart?

Mishap, I’m still waiting for ideas. Class warfare (”McMansion, seven-figure bonus) isn’t helping anyone besides drug companies who manufacture medication for hypertension. Instead of ascertaining why NCR’s CEO didn’t relocate to Atlanta (assuming that’s accurate), why not find out why the company moved its HQ here along with many employees–unless you’ve got to use that stick.


May 10th, 2011
12:18 pm

For those if you looking to get out Atlanta hop on I-20 east and head to Augusta (Georgia’s 2nd largest city) It worked for me. Do your research and it just might work for you!

jane quatam

May 10th, 2011
3:13 pm

The topic of todays blog is inflation, not politics so try to disengage your programmed right/left paradigm brought to you by corporate media, and focus on the problem. Inflation is a problem despite what the FED tries to propagate. They use a flawed inflation model that doesn’t include food or energy, both of which are necessary for sapient life forms.

The problem, holds the cure, inflation is being caused by high energy costs which is depressing the economy and job creation, while inflating gas prices and food prices. Alternative energy sources should reduce the need for fossil fuels. Georgia Tech should be funding research and partnering with private industries to bring new energy savings and energy production methods to light.

New industries would produce new jobs. How about an LED plant or two for Georgia? How about some photovoltaic production? How about some stiff tariffs on cheap chinese solar cells being sold for less than the cost of manufacturing them?

Technology has shown itself to be the driving factor for future growth, lets make sure Georgia and Atlanta invest in and participate in the technical areas that must be developed to solve our current problems.

Inflation is real and so is deflation, check home prices. We are being buffeted by peak oil prices and commodity manipulation caused by too many dollars being printed and having nowhere to go but commodities. Thanks FED you blew it again. Both of these problems can be fixed, if there is political will, or we can continue to bicker over left/right rhetoric and continue on our economic collapse. Choose wisely the future and your life may depend on it.


May 10th, 2011
4:43 pm

It’s not class warfare, it’s a simple fact that the state of GA kept the CEO (Bill Nuti) of a rapidly shrinking company in place a few more years by handing over $130M+ in tax incentives to bring over ~2,000 jobs including many that are low level manufacturing jobs. I think if a CEO can justify an enormous salary by bringing value to shareholders then why not. I just don’t think GA should be the ones writing the check when we basically have to gut our ability to pay for services this company uses w/ undeserved tax benefits.

He fattened his paycheck only by putting his hat in hand and begging vs. innovating or taking risks. Nuti took 1.5M from NY to move 100 exec level jobs there in ‘07 even though he was already living there, maintained exec offices, and flying the corporate jet to Dayton when it pleased him. Apparently, the man doesn’t lift a finger unless we write a 7-9 figure check. Every one of those employees he brought pays nothing to the state in income taxes b/c the company collects them and keeps them for itself since it was otherwise bleeding red ink. Something like 2/3 of the HQ workforce elected not to move to GA and stayed behind in Dayton which has far worse unemployment. Additionally, you have to realize that NCR hasn’t created new jobs in close to a decade. Prior to their merger w/ AT&T, they employed over 60,000 people and were in the top 100. Within a year or two, I would expect that number to be closer to 15,000. To create those ~800 jobs in GA, he closed two factories and eliminated significantly more jobs. The guy has 22% approval rating w/ employees on Glassdoor (pretty atrocious).

NCR doesn’t own any property in GA at this point. They practically built Dayton and owned everything down to the local country club. All of which they abandoned for a tax break. They sold off their real estate and leased everything under Hurd/Nuti. What’s to keep Florida from offering 100M in 2-3 yrs at the expiration of the GA deal? How many people fall right back onto our unemployment roles when that happens? What happened when First Data left and then came back? By then Nuti will be gone w/ a golden parachute or out ruining a slightly bigger company. GA doesn’t have the tax base to beat out FL or TX and starting it is a slippery slope to more corporate welfare. Can you see any positive impact of the NCR move? If nothing else, you now have 13 other companies on the F500 reconsidering their relationship w/ GA since there’s very uneven handling of tax breaks. What happens if Home Depot decides it likes Jacksonville better in a couple years? How many millions would we give up to keep the ~6,000+ jobs at HQ in town?

I don’t work for NCR. I did for 18 months in ‘05-06 and while I generally liked my coworkers, I saw a company ravaged by poor short term decision making that had virtually destroyed a company w/ 100+ yrs of history (was on the very first Fortune 500 list). I left b/c they didn’t have any real career growth and bottom rung employees were barely in keep the lights on mode. Management gutted any semblance to innovation to channel stuff/workforce manage their way through another quarter.

Perdue could have just as easily spent the $100M+ funding repayable student loans to GT/UGA/Emory grads that stayed in the state post graduation. GT undergrads avg over 60k/yr starting salary but 50% of them take jobs out of state. Spend the 100M on tech incubators, incentives for public/private research partnerships, etc. Incentivize our best/brightest to stay and put down roots. Bribing a struggling company w/a tettering CEO is probably one of the worst things they could have done. They could have just spent 100M on scratch off lotto tickets (and paid up HOPE a few more years) and gotten a better return. So yeah, I don’t have a great solution but I know about a terrible one when I see it.

Brad Steel

May 10th, 2011
4:50 pm

Atlanta sucks. Wish Dela was ready, but they are never on time – worse airline in the business.

mo money

May 10th, 2011
8:33 pm

with all the liberal deadbeats in this state looking for free government handouts, the economy will be terrible for years.


May 11th, 2011
1:40 am

Inflation is our biggest threat with all the stimulus, but I hope he’s right. Why we continue to let the speculators dictate what we pay for food and energy is beyond me. Enough already!


May 11th, 2011
1:41 am

[...] third round is unlikely now. In fact, Atlanta Fed President Dennis Lockhart told me that in a recent [...]