DANVILLE, Virginia (Reuters) –
The U.S. economy appears to have stabilized and may not need all the stimulus the central bank had planned to offer, Richmond Federal Reserve Bank President Jeffrey Lacker said on Thursday.
"The economy appears to have leveled out and I believe we can look forward to better times ahead," Lacker told a business group.
Even as he cautioned that "conditions remain distressed in many industries and localities," Lacker, a voting member of the U.S. Federal Reserve's policy-setting panel this year, said the central bank would have to calibrate its purchases of long-term securities carefully to avoid providing too much economic stimulus.
Lacker said the Fed's commitment to buy up to $200 billion in debt of government-sponsored mortgage agencies and up to $1.25 trillion in mortgage-backed securities issued by those agencies has supplied reserves to banks that reduce their need to borrow from the Fed. At a certain point, the banking system would no longer need to borrow to obtain the desired level of reserve balances, he said.
"I will be carefully evaluating whether we need or want the additional stimulus that purchasing the full amount ... would provide," he added.
Lacker's remarks suggest pressure is already building within the Fed to pull back some of its unusual measures to boost the economy as signs of recovery mount.
The Richmond Fed president said inflation is currently "right on target," but a further large decline would be unwelcome.
However, measures of inflation expectations, while imperfect, suggest consumer price pressure is more likely to rise than fall, he said.
He said the central bank's decision to hold rates low in 2003-2004 over deflation worries will factor into his thinking about when to raise rates as the economy recovers from a painful recession.
"Looking back... some economists have made the case that we waited too long," he said. "I'm taking that on board ... as we time our exit going forward."
In an interview with the Danville Register & Bee newspaper, Lacker said the U.S. housing market had picked up about five months ago and would no longer be a drag on economic growth.
Exports may be picking up and the rate of job loss is slowing, he told the paper. Lacker added that banks no longer appeared to be tightening credit and that credit conditions will ease as the job market rebounds.
"It's a time of opportunity, even for people experiencing hard times because of the labor market," Lacker said.
(Reporting by Mark Felsenthal; Editing by Neil Stempleman and Andrew Hay)
WASHINGTON (Reuters) –
The number of U.S. workers filing new claims for jobless benefits fell last week to 570,000, and those collecting long-term unemployment benefits dropped to the lowest level since April, government data showed on Thursday.
Analysts polled by Reuters had forecast new claims slipping to 565,000 in the week ending August 22 from 580,000 the prior week, which had been previously reported as 576,000.
Continued claims fell to 6.133 million in the week ended August 15 from 6.252 million the prior week. That was the lowest since the week ending April 4 when they were 6.045 million.
In another sign that the recession-battered labor market may be healing, the four-week moving average of people filing claims declined to 566,250 from 571,000.
But the federal "cash for clunkers" program, designed to aid the struggling U.S. automobile industry, did little to help workers in Michigan during the middle of the month. In the week ended August 15, the number of people making initial filings for jobless benefits rose 4,068 in the state, all from the automobile industry, which is based in Michigan.
(Reporting by Lisa Lambert, Editing by Kenneth Barry)
ATLANTA (Reuters) –
Boeing Co (BA.N) said on Thursday that its 787 Dreamliner would make its first flight by the end of this year, with the first delivery expected in the fourth quarter of 2010.
The plane maker said it has concluded that the initial test-flight planes of the long-delayed 787 have no commercial market value because of necessary modifications that have been made.
It added that costs previously recorded for the first three test planes would be reclassified as research and development expense, resulting in an estimated pretax charge of $2.5 billion, or $2.21 a share, against results for the third quarter.
The aircraft, already two years behind its original schedule, was to fly in the second quarter of 2009, but the flight was delayed so Boeing could address a structural problem.
The company's shares rose 5.6 percent in premarket trade.
(Reporting by Karen Jacobs, editing by Gerald E. McCormick)