LAFAYETTE — Despite the slow recovery of the national economy, Lafayette’s oil patch is showing signs of promise, an official with the Federal Reserve Bank told area business leaders Wednesday.
“Positive news is coming from the oil and gas industry, especially here in Louisiana,” said Federal Reserve Bank of Atlanta President and CEO Dennis Lockhart, who spoke at a luncheon sponsored by the Greater Lafayette Chamber of Commerce.
“Business contacts in the region have been reporting an influx of fabrication work and backlogs in orders for pipelines, supply boats and drilling equipment,” Lockhart said. “In Lafayette, employment in the energy sector has increased very recently, providing a big boost to the local economy.”
Lockhart said that at a recent meeting in New Orleans, he was struck by how upbeat the current tone is in Louisiana compared with last year, when business leaders were fixated on the BP oil leak and the ensuing moratorium on deepwater oil and gas drilling permits in the Gulf of Mexico.
“Louisiana has a much rosier look to it than a lot of other states,” he said.
The comments about the local economy were an exception in a speech that delved mainly into what Lockhart labeled as a “disappointing and frustrating” recovery of the national scale.
But Lockhart said he does not expect the country to slide back into recession but rather continue a slow recovery.
“While the risks have increased, I do not expect a recession,” he said. “In my view, there is sufficient fundamental strength in the economy for a modest cyclical recovery to proceed while the process of necessary structural adjustments moves along.”
Much of Lockhart’s speech to the chamber focused on what he said is the critical need to reduce overall debt in the nation.
That task is made difficult because, in the short term, more consumer and business spending is needed to push the economy forward.
Federal Reserve officials announced a strategy last month to keep interest rates at near zero for the another two years, a move that could encourage more spending.
Lockhart said he supports the Federal Reserve’s current monetary policy, but he said the long-term policy must not lose sight of the need to address major issues in the nation’s economy, including the overall debt of consumers, businesses and government.
“Finding the right path through these seemingly conflicting pressures is challenging,” he said.