Audio clip
Dennis Lockhart
PDF: Chattanooga Rotary speech
Chattanooga’s tourism industry could be the key to the local economy remaining fairly stable as a slowdown occurs nationwide, said Dennis P. Lockhart, president and chief executive of the Federal Reserve Bank of Atlanta, on Thursday.
Mr. Lockhart, after an address to the Rotary Club of Chattanooga at the Convention Center, said the economic outlook for the city remains positive.
“I think fortunately for Tennessee in general and for Chattanooga, in the housing sector you didn’t experience the excesses and therefore are not necessarily seeing the same degree of deterioration, and that’s a good thing, all things considered,” he said.
Mr. Lockhart said he knows tourism was important to the area, though a deeper analysis would be necessary to understand all of the drivers of Chattanooga’s economy.
He said Southeast tourism seems to be holding up nicely.
“Put differently, the tourist is not neccessarily canceling trips or vacations or outings, simply maybe changing the level of expenditure, so I think in that particular sector, I think Chattanooga should expect a continuing pretty good picture,” Mr. Lockhart said.
He added that though the outlook is good for the local economy, the broad industrial base of Chattanooga is likely to be affected by the national economy.
The Atlanta Fed is one of 12 regional Reserve Banks, and represents parts of Tennessee, Louisiana, Mississippi and Alabama, Florida and Georgia — the states that make up the Sixth Federal Reserve District.
In his address, he said there is not yet enough proof the country is in a recession and that economic activity during the most recent quarter remained positive.
However, he acknowledged the country was in an economic slowdown, possibly on the leading edge of a recession, and predicted the gross domestic product for the first quarter would show little if any growth. He said weakness in the housing market is to blame for slow economic growth.
CapitalMark Bank & Trust President Craig Holley, who attended the meeting, said that “the key takeaway for me is that continued sluggish growth is still very likely.”
Mr. Lockhart said weakening growth, unstable financial markets and inflation are the biggest challenges faced by the U.S. economy.
Recent actions by the Fed to intervene in the economy are risky, he said, but are an attempt to maintain or restore normal market function.
He also said tax rebates should help stimulate the economy.
“Looking ahead further to 2009, my outlook becomes more optimistic,” he said. “It will take longer than I earlier expected to return to solid growth, but by the fourth quarter of 2008 the conditions should be in place to support a return to healthy growth next year.”
