The Fed Listens: Finding Value in Listening
Posted on by Kevin Bielmeier
You’ve likely heard the adage: “there’s a reason we have two ears and one mouth,” emphasizing the importance of listening over speaking in communication. We live in a time with more messaging aimed at us than ever before. According to Seth Horowitz, an auditory neuroscientist from Brown University, “Listening is a skill we’re in danger of losing in a world of digital distractions and information overload.”
Perhaps for this reason, the Federal Reserve Bank made an unprecedented decision to hold their first-ever “Fed Listens” conferences across the country, to be “an important external-facing part of the review of the Fed’s monetary policy strategy, tools, and communication practices.” 1
In May of this year, CERC was invited by the Federal Reserve Bank of Boston to join other selected groups in New England to participate in their “Fed Listens” conference. The questions were narrowly focused on the effects that interest rates, inflation, and the labor market have on our region, and were divided into three panel discussions. The first panel comprised representatives from organizations that focus on underserved populations. The second panel included small business owners, entrepreneurs, and labor leaders. Representatives from various demographic groups formed the third panel. Each panel were asked the same four questions:
- What are the cost and benefits of the current, tight labor market?
- Regarding the dual mandate, how do you view the relative importance of low unemployment vs stable prices?
- What effects have you seen from the long period of low interest rate? What are some of the costs you experience when interest rates change?
- How has the Fed done in terms of achieving its mandate over the past ten years? What can the Fed do better?
After each panel answered these formal questions, the conversation was opened into a Q&A with the audience, which proved to this ‘listener’ to be more interesting, nuanced and diverse-in-topic.
A summary was published by the Boston Fed highlighting the discussion points prompted by each question, including an overview of the responses to two surveys related to the conference.
In conclusion, many of the participants seemed satisfied with tight labor markets and low interest rates, though some expressed concerns about whether all groups have received equal benefits from this environment. They felt underserved populations and minority communities still face higher unemployment and struggle with high job turnover. In addition, members of these communities often are unable to access credit due to poor credit histories and susceptibility to predatory lending. On the other hand, small businesses have struggled to find employees in this tight labor market. Most panelists said the groups they represent value low unemployment slightly more than low inflation. Responses from the conference survey reflected a similarly slight preference for low employment over low inflation. Participants in the 3rd party survey leaned the other way, with slightly more valuing low inflation to low unemployment. Concerns regarding inflation came mostly from the retired community and older survey respondents, who worried about their savings being depleted by cost of living increases. 1
Whether this feedback to the Fed will have any effect on their future maneuvering is anyone’s guess. The art and science of setting and adjusting interest rates to keep our national economy balanced goes well beyond the opinions of a few, but it was encouraging to see them set an example of placing importance on the value of listening.
The Connecticut Economic Resource Center also values the importance of listening. For example, we are currently engaged in a listening tour of residents from four neighboring towns, with the aim of producing an economic strategy for their region based on their input. To learn more about how CERC can support your municipality, region, or business, call us at: 860.571.7136 or contact us online.