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08 Jul 2008 - 13 Jun 2011
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University News
Fed Leader: Don't Expect Quick Economic Turnaround
The economic slowdown will continue throughout the year, but there’s a glimmer of hope for 2009, according to Atlanta Federal Reserve Bank President Dennis Lockhart, who addressed a capacity audience at Georgetown’s Lauinger Library on July 1.

Speaking as part of a panel on the current state of the economy, Lockhart, who previously served on faculty for the Walsh School of Foreign Service master's program, suggested that the U.S. economy would continue to be challenged by weakness, continuing threats to stability and uncomfortable levels of inflation.

“The drag of high energy costs, continuing financial market stress and a still declining housing sector may continue for a while,” he said, adding that he expects “gradual improvement of growth in 2009.”

He said self-reinforcing progressive deterioration could continue in the housing market, and that will wind up affecting the financial markets. He also said that coupled with the lack of protection of financial markets and the overall domestic economy from surprise events around the world have contributed to his forecast.

Lockhart’s comments come after the Fed halted an aggressive rate-cut campaign announcing on June 25 that it held its benchmark fed fund rate target at  2 percent and warning that inflation had grown as a threat.

The Georgetown University Library Associates collaborated with Lynx Investment Advisory to organize the event, “Economic Slowdown, Market Fallout and the Path to Financial Recovery.” Lila Hunnewell of Cambridge Associates; Matthew Gelfand of Lynx Investment Advisory; and Lawrence Kochard, Georgetown’s chief investment officer, rounded out the panel discussion.

“The event provided an arena for a frank discussion of the current state of the economy from people who know what is going on,” said James Angel, associate professor of finance in the McDonough School of Business.

Kochard manages the university’s endowment, which reached $1 billion dollars in 2007.  He offered the audience some advice for surviving the current crunch.

“You really need to step back and have a long-term outlook, have a long-term theme and have those themes challenged by the input from the news stories,” said Kochard. “But you don’t really want to panic and overreact either on the upside or the downside, which I think most investors, whether they're individual or institutional, are prone to do.”

Lockhart said it is important to be alert to a variety of indicators in the current market. "The current set of circumstances calls for being especially vigilant,” he said, “and attentive to public and business psychology as regards costs and prices.”

Source: Office of Communications (July 3, 2008)

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'The drag of high energy costs, continuing financial market stress and a still declining housing sector may continue for a while with gradual improvement of growth in 2009.” -- Dennis Lockhart, president of the Atlanta Federal Reserve

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