A trio of Federal Reserve officials said the United States needed to speed up work on issues like income inequality and community development, or risk weaker economic growth and more fractured politics in the future.
“This inequality question that has come to the fore, I think, has implications for economic growth, for global strength and the global role of our country,” Atlanta Federal Reserve Bank president Dennis Lockhart said at a community development forum sponsored by the Philadelphia Federal Reserve Bank. “We are an economy dominated by consumption…The broader the prosperity the stronger the economy.”Citing the sense of dislocation among workers kicked out of jobs due to trade or technology, Cleveland Federal Reserve Bank president Loretta Mester said the response to the issue “is very important to the next 10 or 20 years … A free trade economy is better. But that does not mean everyone will be better off … Coal mining is declining because of technological change. How do we make sure (workers) are not left behind?”
It was an unusual forum, devoid of the usual discussion of interest rate policy typical when Fed governors or regional bank presidents appear in public. Instead it edged toward issues that have been at the core of the presidential election. They acknowledged their indirect role: monetary policy, they said, won’t be the main tool to improve education, retrain workers for emerging industries, or rebuild infrastructure.
“One of the lessons of this electoral season is that there area a lot of people who believe the elites don’t care and have not paid attention to an inclusive economy,” Lockhart said, acknowledging that his view was from a “bubble” of relative privilege.
While neither Lockhart, Mester, nor the host Philadelphia Federal Reserve bank president Patrick Harker mentioned either Republican presidential candidate Donald Trump or Democratic candidate Hillary Clinton, the economic tensions at the center of the campaign set the backdrop for their panel discussion.
“We can’t wish for the resurgence of an economy long past,” Harker said in remarks closing out a three day conference on “reinventing” communities. “Economies evolve, and approaches to growth and stability have to change with them.”
Source: Reuters (Reporting by Howard Schneider; Editing by Chizu Nomiyama)