Regional employment indexes.
The question at hand is whether the momentum we see building in recent data--and the optimism detected from conversations with our business contacts--will lead to continued or even improving economic activity going forward. I'll turn to President Lockhart again, who said in Miami that:
My key working assumption is that growth will accelerate in the second quarter and repeat in subsequent quarters. I expect stronger growth will help to absorb underutilized resources in the economy, especially labor resources.
Although his comments were directed toward the national economy, this outlook holds for the region as well. In addition to the fact that winter weather was a temporary shock, there are other reasons for this outlook. President Lockhart noted in a March 6 speech at Georgetown University that he believed the economy's fundamentals are stronger, and the headwinds that have buffeted the economy and restrained growth are weaker. He continued: Let me expand on my claim that the economy's fundamentals are stronger. I think basic conditions in several key sectors of the economy are much improved compared with earlier in the recovery period. I would cite banking, housing, energy, and manufacturing as examples.
Household balance sheets are much healthier now thanks to reduced debt, higher saving, and stronger asset prices, including higher home values.
Business and financial-system leverage has been significantly reduced from levels precrisis that were demonstrated to be unsustainable. Business profitability is good, and firm balance sheets are generally liquid.
Likewise, fiscal imbalances, while not solved for the long term, are somewhat less a near-term concern.
Finally, employment markets are unquestionably in a better state compared to even a year ago.
Regional economic data and intelligence gathered from our business contacts support these broad themes, all of which will help serve as tailwinds for the Southeast's economy in 2014.
by Mike Chriszt, vice presideni in the Atlanta Fed 's public affairs department