Last Friday’s jobs report released by the Labor Department fell well below Wall Street’s expectations. The 38,000 net new jobs added to the U.S. economy combined with the global uncertainty from the United Kingdom’s potential exit from European Union may influence the Fed’s June rate hike decision next week.
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Atlanta Federal Reserve President Dennis Lockhart told FOX Business Network’s Liz Claman the weak jobs report and current Brexit (an abbreviation of "British exit”) situation tilts the scale towards patience when considering a June rate hike.
“That global risk associated with Brexit will be clarified. Now, if they vote to leave, there will be uncertainty as to how it’s going to unfold. It’s a multi-year process, but at least the immediate decision will be clarified,” Lockhart said on Countdown to the Closing Bell with Liz Claman.
When it comes to a decision based on the U.S. economy, Lockhart said more will be known about its strength after Friday’s jobs report is further analyzed to determine if it was an anomaly.
The Atlanta Federal Reserve President said he doesn’t interpret the job report as a signal of a slowdown of the U.S. economy.
“I’m still believing that the economy is chugging along, using round numbers, about 2% annualize GDP growth rate,” he said.
Lockhart explained the impact a 1% move higher in the GDP growth rate can have on the economy.
“The difference between 2% and 3% growth could be very very significant for many things we care about in our society for infrastructure, for entitlements that’s going to take care of me and others as we get older, for education. We have a lot of serious problems that 3% growth can help solve,” Lockhart said.
Federal Reserve Chair Janet Yellen on Monday said she expects the U.S. economy to continue its growth pace due to promising economic indicators such as stronger household incomes, higher consumer confidence and strength in the housing market.
“Positive economic forces have outweighed the negative, and despite the challenges that the economy continues to face, I continue to expect further progress toward our employment and inflation objectives,” Yellen said.