Atlanta Fed President Dennis Lockhart (non-voter) said the U.S. economy continues to face significant uncertainty and risks, but that he expects an improvement in growth in the second half of the year.

Speaking to the Jacksonville Chamber of Commerce, Lockhart said inflation is at uncomfortable levels, with some indications of rising expectations. He noted the current elevated level of inflation will begin to ease as food and energy prices moderate.



"Although conditions have improved on some fronts, I don't feel we can yet 'breathe easy,'" Lockhart said. "The path of the economy is still enveloped in considerable uncertainty, and serious risks remain."

He also said the markets are "more settled, but still fragile."

"My storyline looking ahead is not so severe a slowdown, but not so quick a recovery," he said.

Lockhart summarized his thoughts on the U.S. economy, saying "we have a slow-growth economy poised for gradual recovery, weak but not collapsing labour markets, a slowing pace of decline of housing, more settled but still fragile financial markets, and uncomfortable levels of inflation with hints of rising inflation expectations."

By Stephen Huebl and edited by Cristina Markham