Dallas Fed President Richard W. Fisher blames Washington for the lack of job creation and the slow pace of economic recovery.
In a speech at a Midland, TX community forum yesterday on the state of the economy and his reasons for dissenting from the decision of this month’s Federal Open Market Committee, Fisher said regulatory and fiscal uncertainty out of Washington are preventing businesses from making decisions about their futures.
President Barack Obama repeatedly mentioned “uncertainty” as a reason for raising the debt ceiling through the end of 2012. Yesterday House Minority Leader Eric Cantor said the House would work to restore certainty for businesses when Congress returns to session in September.
Expect to be hearing the term used as a political tool, as Washington continues to debate deficits and job creation.
“Those with the capacity to hire American workers―small businesses as well as large, publicly traded or private―are immobilized. Not because they lack entrepreneurial zeal or do not wish to grow; not because they can’t access cheap and available credit. Rather, they simply cannot budget or manage for the uncertainty of fiscal and regulatory policy. In an environment where they are already uncertain of potential growth in demand for their goods and services and have yet to see a significant pickup in top-line revenue, there is palpable angst surrounding the cost of doing business. According to my business contacts, the opera buffa of the debt ceiling negotiations compounded this uncertainty, leaving business decision-makers frozen in their tracks.”
On his reasons for dissenting from the FOMC decision:
“My concern is not with immediate inflationary pressures. Core producer prices are still increasing at a higher than desirable rate. But I have suggested to my colleagues that while many companies have begun and will likely continue to raise prices to counter rising costs that derive from a range of factors—including the run-up of commodity prices in 2010 and increases in the costs of production in China—weak demand is beginning to temper the ability of providers of goods and services to significantly raise prices to consumers.
My concern is with the transmission mechanism for activating the use of the liquidity we have created, which remains on the sidelines of the economy. I posit that non-monetary factors, not monetary policy, are retarding the willingness and ability of job creators to put to work the liquidity that we have provided.”