Vice President Michael Chriszt of the research department of the Federal Reserve Bank of Atlanta presented an economic overview to the members of the LaGrange Rotary club at their Wednesday meeting.
Chriszt delivered the Fed’s prediction of a “bumpy, apprehensive recovery for the nation.”
On behalf of the club, Rotarian Ted Beason had arranged for Chriszt’s visit. Beason introduced Chriszt by explaining how everyone lives with the Federal Reserve monetary policy everyday. “The Fed determines what we pay to borrow and the interest rate we earn on our savings,” Beason said. “The Fed also stabilizes the value of the dollar against other currencies. These are all big responsibilities and are accomplished in co-operation with sound fiscal policies which come from the elected part of government.”
Beason’s final comments told of Chriszt’s background and experience in the political science and economics.
Previously, Chriszt was the director of international and regional analysis from 2004 to 2008. He was responsible for the analysis of economic conditions in the sixth Federal Reserve district as well as international economic developments. In 1989, Chriszt joined the bank and then joined the research department in 1990.
Chriszt’s educational background includes two bachelor’s degrees, a master’s degree, a certificate of study from the European Union and is a graduate of executive educational programs at Duke University’s Fugua School of Business and the University of Virginia’s Darden Graduate School of Business Administration.
Chriszt explained that the two main goals of which the Federal Reserve is mandated to strive to achieve are to keep inflation low and employment high. He then pointed out how the nation as a whole is doing and how Georgia and LaGrange compare with the national figures.
“The economy has been operating at a pace of growth of around 2 percent since the recovery began 40 months ago,” Chriszt said. “Simply said, the economy is stuck in a slow-growth mode.”
Chriszt sighted factors that are helping the economy. “Sales of new and existing homes are rising, they still remain low, but at least we’re headed in the right direction. Southeast brokers and home builders expect that year-over-year home sales growth will remain positive,” Chriszt said. “Production indicators show growth, albeit off a bit from earlier in 2012.” He also stated that so far, the holidays are “also shaping up pretty good.”
Chriszt said that the national inflation rate is hovering around two percent and that the “fiscal cliff” would be most significant in the first half of 2013. He also said that, “I would rather roll down the hill than jump off the cliff.”
Chriszt pointed out that although the number of unemployed in LaGrange is declining at a faster rate than the state as a whole, LaGrange’s unemployment rate is higher than the state of Georgia. He explained that this is due to the fact that more people are optimistic in LaGrange, therefore more people are entering the workforce seeking jobs. He said that when the economy is perceived as being so bad, people then are so discouraged that they do not even try to get a job. If they are not seeking a job they then do not even enter into the calculations for the unemployment rate and the rate will then appear to be lower.
Chriszt ended his presentation by naming the negative factors that affect the economy as “headwinds” and the positive factors that affect the economy as “tailwinds”, and then gave specific examples for each. He listed the fiscal cliff, longer-term fiscal policy challenges, un- and underemployment, slow global demand and Europe as the “headwinds”. The “tailwinds” he listed were housing, energy, autos, low interest rates and improving business and consumer balance sheets.