As he took the stage during February’s Economic Outlook presentation, Dr. David Altig, executive vice president and chief economic advisor for the Federal Reserve Bank of Atlanta, looked out at the Chattanooga crowd of Chamber leaders and members and admittedly joked:
“I’m sorry for all that money you spent on your Econ education,” he began, “because the textbook just is not coming through.”
Economic activity has defied the textbook rules, he said, while also following them.
“I am conflicted between two seemingly mutually exclusive narratives,” he began.
Those narratives?
“Everything is going according to plan,” he said. “On the other hand. Nothing is going according to plan. Any textbook you open says: this does not happen.”
As part of its Economic Outlook presentation, the Chattanooga Chamber of Commerce invited Altig to speak to gathered members. During his 45- minute presentation, Altig, with humor and candor, admitted a “confluence of incredible circumstances” within the American economy.
“At the time of a burst on the supply side of the economy coming out of the pandemic-era disruption, we at the same time had incredible stimulus and an incredible bump to demand,” he said.
Altig focused on three main points:
- Progress on the inflation rate is real, but sustainable attainment of the 2% goal may not be complete.
- Strong employment growth may not be so surprising, and despite the jobs numbers, the labor market has been cooling.
- Economic growth has been much stronger than anticipated. Is fiscal policy the key?
“Will this year look like last year?” he concluded. “I hope so. But … we’re guessing that this coincidence of supply expansion absorbing all of this incredible demand in fiscal stimulus may not completely persist into next year.”
“We’re going to continue to make inflationary progress; it will be a bit slower,” he said. “The labor market does look like it’s softening so that’s going to alleviate some of our concern. But maybe that textbook story that there is some downside to that, even if modest, may finally lift its ugly head. Let’s hope not.”
