WASHINGTON – Atlanta Federal Reserve Bank President Jack Guynn (search) said Monday the pieces for a more solid, broad-based economic recovery were "falling into place," although it appeared some sectors were still losing jobs.
"Although all sectors have not bounced back as fast or as strongly as we might have liked, the fundamental pieces of a more balanced expansion seem to be falling into place," Guynn told the Meninak Club in Jacksonville, Fla.
"I think it's now possible to make out the shapes and forms of emerging developments that indicate with a fair degree of certainty that faster growth in the months ahead looks likely," he said.
A copy of his remarks was made available by e-mail.
Guynn, who is among the voters this year on the Fed's policy-setting committee, said he had turned more optimistic in recent weeks. In late-July he had painted a picture of economy likely to gain strength more slowly.
"I believe the overall risks to the economy are receding," Guynn told the civic club.
He said the housing sector and consumer spending (search) were likely to remain strong, and businesses would probably need to start rebuilding depleted inventories amid stronger demand, giving another boost to growth.
However, he also acknowledged the economy had yet to generate jobs despite signs of faster growth.
"The 'job loss' recovery we've been in has been painful and frustrating for many, and the most recent data and anecdotal reports suggest it's likely not over yet," Guynn said.
While businesses have been able to boost productivity — or worker output per hour — to meet stronger demand, there was only so much they could do to raise output without hiring, he said.
"Just as the number of hours in a day is fixed, there's a limit to what firms can accomplish solely through improved productivity, especially during a time of rapid growth," Guynn said. "As growth increases, so will the pressure for firms to expand their payrolls.
Still, he said business contacts were telling him they wanted to see three to six months of solid growth before committing to hire in "significant numbers."
But he did say there appeared to be a growing willingness among businesses to increase capital spending, which many officials have said is the key to a sustainable expansion.
"Firms that have been hunkered down are starting to move on some new initiatives, but in a measured and deliberate way," Guynn said. "Based on the economic data and the reports I'm hearing from my grass roots contacts, the perception of an endless economic funk is finally starting to dissipate."