Chair Jerome H. Powell
Inflation and the Labor Market
("Some of the participation gap reflects workers who are still out of the labor force because they are sick with COVID-19 or continue to suffer lingering symptoms from previous COVID infections ("long COVID"). But recent research by Fed economists finds that the participation gap is now mostly due to excess retirements—that is, retirements in excess of what would have been expected from population aging alone. These excess retirements might now account for more than 2 million of the 3‑1/2 million shortfall in the labor force.
What explains these excess retirements? Health issues have surely played a role, as COVID has posed a particularly large threat to the lives and health of the elderly. In addition, many older workers lost their jobs in the early stages of the pandemic, when layoffs were historically high. The cost of finding new employment may have appeared particularly large for these workers, given pandemic-related disruptions to the work environment and health concerns. Also, gains in the stock market and rising house prices in the first two years of the pandemic contributed to an increase in wealth that likely facilitated early retirement for some people.
The data so far do not suggest that excess retirements are likely to unwind because of retirees returning to the labor force. Older workers are still retiring at higher rates, and retirees do not appear to be returning to the labor force in sufficient numbers to meaningfully reduce the total number of excess retirees.")
Governor Philip N. Jefferson
Opportunity and Inclusive Economic Growth
("First, I would like to address monetary policy. In pursuing its dual mandate, the Federal Reserve is essentially trying to foster and maintain the conditions in which the economy and all its participants can thrive. Research has shown that the benefits of a strong economy—with high employment and stable prices—are especially significant for less advantaged groups. These groups also tend to see the greatest gains later in an expansion, meaning that they benefit the most from sustained periods of growth—like the expansion we were experiencing before the pandemic, which was the longest on record. For example, during the pre-pandemic expansion, the long-standing disparity between unemployment rates for prime-age African Americans and Hispanics and their white counterparts began to close. In fact, disparities in labor market outcomes just prior to the onset of the pandemic were the narrowest in at least 50 years. At the same time, inflation remained low—lower, in fact, than our 2 percent target for most of that time—and showed little sign of picking up despite the strong labor market.
Unfortunately, the pandemic brought about the most rapid and severe labor market contraction of the past 80 years. It also had a noticeably larger effect on the unemployment rates of women and of Black and Hispanic individuals than it did on most other demographic groups. And while job losses were widespread across all sectors of the economy, workers with less education were particularly hard hit. This was especially true for those unable to work remotely or in jobs that required in-person interactions.
As the economy reopened and began to recover, unemployment rates for those groups initially affected the most—Black and Hispanic workers—also fell more sharply. Today, while material disparities in unemployment rates along racial lines persist, these disparities have almost returned to the narrower ranges we saw just before the pandemic.")
Governor Michelle W. Bowman
("The Fed's Survey of Consumer Finances shows similar results. From 1989 to 2019, the percentage of U.S. adults with bank accounts rose from 85.6 to 94.5 percent. This is also true in the increased number of bank accounts owned by members of minority groups over the same time period, especially for Black and Hispanic consumers. Black adults increased bank account ownership from 56.7 to 86.8 percent and Hispanics increased from 63.5 to 89.5 percent.")
Governor Michelle W. Bowman
("Education outcomes, including learning losses and achievements, take time to measure, aggregate, and analyze. As we enter the fourth academic year affected by the pandemic, data on student performance are becoming more available. Much of this early data confirms our initial concerns. For example, early test scores show that throughout the country nine-year-olds suffered a decline in learning outcomes during the pandemic. But other data also indicate that learning losses were unequal and disproportionately affected low-performing students and low-income students.")
Governor Lisa D. Cook
("In 2019, well before joining the Board, I took part in the Federal Reserve's Fed Listens event in Chicago. A key takeaway from Fed Listens was the value of a sustained strong labor market that brings people off the sidelines—those who have been on the margins but who have skills that can be developed and the desire to be part of the workforce, if given a chance. Just two weeks ago, we held another Fed Listens event to hear how businesses, families, and communities are adapting to changes in the post-pandemic economy. Notably, we heard about the burden that lower- and middle-income families are feeling from high inflation. These events highlighted for me the importance of achieving both our employment and price-stability mandates.")
Chair Jerome H. Powell
("The research presented over the years has informed supervisory and regulatory policy debates and continues to challenge our thinking. It has highlighted the vital links between community banks and small businesses, the availability of credit in low- and moderate-income communities, how community banks support their local communities in times of crisis, and the impact of technology.")
Vice Chair for Supervision Michael S. Barr
Making the Financial System Safer and Fairer
("Rounding out my discussion of access to financial services, I will end my remarks today by touching on the importance of the Community Reinvestment Act (CRA). The CRA, first passed in 1977, encourages insured depository institutions to meet the credit needs of the communities in which they are chartered, including LMI neighborhoods, consistent with the safe and sound operation of such institutions.9 The CRA was designed to address past abuses of financial institutions, such as redlining. The CRA sends the unequivocal message that there is no place for discrimination in the financial system, and that every community and every borrower deserve to be treated fairly. Earlier this year the OCC, the Fed, and the FDIC jointly invited comment on a proposal designed to strengthen and modernize CRA regulations to achieve the objectives of the law. I strongly support the goals of the proposal and look forward to contributing to the important work underway, again led by Vice Chair Brainard.")
Governor Michelle W. Bowman
Working Women in the Pandemic Era
("Unlike any previous recession, the downturn in employment fell more heavily on women than men. The unemployment rates for men and women were essentially the same before the pandemic but ended up much higher for women. That was very different from past recessions. For example, after the recession following the housing crisis, unemployment for prime working age men rose to 11 percent, compared to only 9 percent for prime age women.
The women's labor force participation rate is another way to measure their presence in the workforce. Women have made significant progress in closing the gap with men since the 1960s, including in the five years before the pandemic, but that gap reopened after the onset of COVID-19.8 The number of both prime working age men and women in the labor force plunged, but the drop was half a million larger for women.")
Vice Chair Lael Brainard
Strengthening the CRA: A Conversation with Representatives of Native Communities
("As representatives of Native communities, you know all too well the challenges faced by Native communities in getting access to financial services—challenges that were made worse by the pandemic. I have visited with Native communities in South Dakota and Oklahoma and seen firsthand the resiliency and innovation of these communities in the face of numerous challenges. Even with the implementation of the CRA and other complementary laws, tribal economic inclusion is hindered by a lack of banking and credit access. As of the most recent 2019 data, over 16 percent of Native Americans are unbanked—three times higher than the rate for all U.S. households. In part, the large share that is unbanked reflects low access to a bank branch. As of 2021, majority-Native American counties have an average of only two and a half bank branches—less than one-tenth the 26-branch overall average for all counties nationwide. Native small businesses often struggle to access capital: CRA small business and small farm lending per capita in majority-Native American census tracts is only about a quarter of that in majority-White-non-Hispanic tracts.
As representatives of Native communities, you bring valuable insights to CRA reform because of your extensive knowledge of the investment and credit needs of Native communities, citizens, and businesses. The interagency CRA proposal was informed by consultation with Native representatives through roundtables, listening sessions, meetings, and comment letters. Indeed, we took much of your feedback from comment letters to develop the Native Land Areas sections of this proposal. As a result of this valuable feedback, the interagency CRA proposal would provide additional scope for bank loans, investments, and services in Native communities. Today, I want to focus on several aspects of the proposal that are beneficial for Native communities.
First, the proposal provides greater incentives for community investments in Native Land Areas by providing enhanced clarity and specificity about what activities qualify for CRA credit. The proposed activities in Native Land Areas cover four specific place-based categories: revitalization; essential community facilities; essential community infrastructure; and disaster preparedness and climate resiliency. The proposal also incorporates a new definition of Native Land Areas based on the political status and government recognition of tribes and tribal areas that would enable the qualification of place-based activities in Native Land Areas.
The proposal also provides clarity for Native community development financial institutions (CDFIs) and minority depository institutions (MDIs). Recognizing that Native CDFIs and MDIs are critical players in supporting credit access and investment in Native communities, the proposal provides additional certainty that activities with Treasury-certified CDFIs will qualify for CRA consideration and provides greater clarity to banks on receiving credit for activities with MDIs.")
Vice Chair Lael Brainard
Crypto-Assets and Decentralized Finance through a Financial Stability Lens
("Crypto and fintech have introduced competition and put the focus on how innovation can help increase inclusion and address other vexing problems in finance today. Slow and costly payments particularly affect lower-income households with precarious cash flows who rely on remittances or miss bills waiting on paychecks. Many hard-working individuals cannot obtain credit to start businesses or to respond to an emergency.")
Governor Michelle W. Bowman
The Outlook for Inflation and Monetary Policy
("Job creation signals strong labor market demand, particularly in the current environment, with a large number of available jobs and fewer job seekers. In addition, the tightness of the labor market is exacerbated by a labor force participation rate that remains far below the pre-pandemic benchmark, representing millions of workers sitting on the sidelines. Many of these are early retirees, some incentivized to retire during the pandemic, and those with family caregiving challenges including very high costs for childcare. While the strong job market has brought some of these workers back into the workforce, it seems that many are still waiting or may not return, meaning that labor shortages will likely persist in many sectors of the economy.")
Chair Jerome H. Powell
("The best insight and analysis come from people who live and work in communities and have an inside view of the struggles and opportunities within. The Federal Reserve System has made a priority of engaging with leaders and stakeholders on opportunities most relevant to tribal economic prosperity. For example, input from tribal stakeholders has been invaluable to informing the important work of modernizing the Community Reinvestment Act, which was incorporated into the recently published proposal that we are looking forward to getting comments on. We also value the growing representation of tribal voices on our boards of directors and advisory councils at Reserve Banks, helping us to better understand economic conditions in Indian Country.
Many of you are aware of the Center for Indian Country Development (CICD), our national institute dedicated to helping tribes reach their full economic potential. We are excited to be expanding its capacity to conduct economic research and data analysis to support the long-term economic prosperity of Indian Country, in partnership with Indian Country. We look forward to CICD's ongoing collaboration with tribal communities on research and data.
Additionally, an initial St. Louis Fed partnership with the Osage Nation, to provide youth financial education, has led to partnerships with tribal governments across the country that provide personal finance education, often in their Native languages. Tribal leaders nationwide have also joined recent listening sessions to discuss the impacts of inflation. Similar sessions were held on our pandemic response facilities, which were adapted after hearing their input.
Other Federal Reserve partnerships with Indian Country include initiatives on access to credit; Native community development financial institutions; financial education programs tailored to early childhood, secondary, and higher education; workforce development; housing; social services; and elder programs.")
Governor Lael Brainard
Variation in the Inflation Experiences of Households
("First, low- and moderate-income households could experience inflation that diverges from the average because their consumption baskets differ systematically from the average. Lower-income households spend 77 percent of their income on necessities—more than double the 31 percent of income spent by higher-income households on these categories.
Several studies have found that the consumption baskets of lower-income households have experienced higher-than-average inflation rates over time. Research from the Bureau of Labor Statistics (BLS) has examined the effect of different consumption baskets by using the same elementary price indexes as used in the official CPI but assigning the weights of these components to reflect the consumption bundles of different types of households. A 2021 working paper by BLS staff based on data from 2003 to 2018 found that a price index reflecting the consumption basket for households in the lowest-income quartile grew faster than the overall CPI, while a price index reflecting the consumption basket for households in the highest-income quartile grew more slowly than the overall CPI. A 2015 BLS study found a similar result using data from 1982 to 2014. Of course, the recent sharp increases in inflation may have affected the consumption bundles of lower-income households relative to the average differently than in previous cycles.")
Governor Christopher J. Waller
The Red Hot Housing Market: the Role of Policy and Implications for Housing Affordability
("Home buying during the pandemic has been strong among minority families as well. In 2020, 7.3 percent of home purchase loans for owner-occupied properties were taken out by Black families, the highest level since 2007 and well above the low of 4.8 percent in 2013. Still, the gap in homeownership rates between minority and white families remains very wide. Moreover, according to Census Bureau data, homeownership rates for Black and Hispanic families appear to have edged down during 2021. These trends may reflect that the negative economic effects of the pandemic were felt disproportionately by minority households. Indeed, research shows that minority homeowners were much more likely to miss mortgage payments and enter mortgage forbearance than white homeowners. While federal and private sector forbearance programs helped many households keep their homes, families experiencing more permanent or severe income losses may have had to sell their homes and exit homeownership.")
Chair Pro Tempore Jerome H. Powell
Restoring Price Stability
("The labor market has substantial momentum. Employment growth powered through the difficult Omicron wave, adding 1.75 million jobs over the past three months. The unemployment rate has fallen to 3.8 percent, near historical lows, and has reached this level much faster than anticipated by most forecasters (figure 1). While disparities in employment remain, job growth has been widespread across racial, ethnic, and demographic groups.")