SARASOTA -- There was no table for two, roses or champagne. The only date Dennis Lockhart had on Valentine’s Day was an auditorium stuffed with people hungry for economic improvement.
They left gorged.
Lockhart, president and CEO of the Federal Reserve Bank of Atlanta, forecast the economy to gain tangible traction this year, but not enough to budge the Fed’s historically low rate until late 2014.
It also will take Florida longer to recover than most, due to the systemic problems posed from the historic housing bust, Lockhart said Tuesday night at New College of Florida.
Nearly 200 students, faculty members and area business professionals packed the Mildred Sainer Pavilion for the speech. Earlier in the day, Lockhart also gave a similar student-only presentation during a private college lecture.
Lockhart said the economic challenges facing the U.S., including sluggish population trends, high unemployment and the European debt crisis, has kept a tight grip on the nation’s monetary policy. He’s targeting 2.5 to 3 percent growth in 2012.
“There are pockets in the South that are simply lagging in recovery,” Lockhart said during a media briefing following his speech. “But we can’t target particular geographic segments with our policy … What keeps me up at night is the unknowns and the unexpected that can be severe enough to throw an economy otherwise on the mend off track.”
Lockhart called 2011 a year of shocks including a run-up in oil prices, the earthquake and tsunami in Japan, and floods in Thailand -- all of which disrupted global supply chains. The European debt crisis and U.S. debt ceiling impasse also shook consumer confidence.
But recent economic indicators have showed promise.
The trend has mostly been led by job growth -- which was anemic throughout the recession. Payroll employment increased by about 243,000 in January. Over the past five months, job gains have averaged more than 180,000 per month, according to the U.S. Bureau of Labor Statistics.
Lockhart believes the full recovery will be slow and arduous as the economy labors through setbacks derived from the burst of the housing bubble, which shrunk the wealth of hundreds of thousands of homeowners across Southwest Florida.
Those Floridians now are working to restore that wealth by saving and paying down debt.
While credit restrictions have lessened some, Lockhart guaranteed banking standards will never again revert to the heydays of 2003 to 2006. This means buyers must come to the market with more money down, keeping the housing market
at a healthy snail’s-pace recovery.
He points to historically high foreclosure rates and existing home inventory, a trend that has kept new construction -- once Florida’s top job sector -- at bay.
“The housing sector is an important piece to get the economy back to sound fundamentals,” Lockhart said. “Construction, per se, is not a big part of GDP, but overall the housing market is, and I’m not happy to say it’s going to take time. We have a number of things at work here.”
That improvement, however, isn’t enough to boost the Fed’s historically low rates. Although that policy doesn’t favor the Florida retirees living off fixed savings incomes, it will become key to hold inflation in check, he said.
The U.S. also needs an improved long-term vision for its debt, which could become another economic drag going forward. That doesn’t mean the Fed will become its only financer -- a cardinal sin of central banking, Lockhart said.
The current balance sheet of the Fed is $2.9 trillion, an increase from about $800 billion before the recession. “We are always going to buy some treasuries, it’s what we do,” Lockhart said. “The two major rounds we had recently were all to support the economy, and try to bring it back to a level of health.”
Another obstacle: As governments continue to contract, resources released from the public sector ultimately must be absorbed from the private sector, an adjustment that won’t be fast or painless, he said.
Lockhart and other event organizers steered the focus toward the positives.
“We want to demystify central bankers,” said David Kotok, program chairman of the Global Interdependence Center, which helped bring the discussion to Sarasota. “They’re real people. They live real lives and they face real problems. In my mind, they do their best to set monetary policy, which is so important for the time we’re in.”
Those attending the event Tuesday night were relieved to hear the mostly positive outlook.
“I never would have expected good news,” said Roger Filmyer, an economics junior at New College. “I feel like the job market will be in a good place when I graduate.”
Josh Salman, Herald business writer, can be reached at 941-745-7095.