Atlanta Fed Chief Optimistic on US Economy but Concerned About High Inflation
Atlanta Federal Reserve President Raphael Bostic maintains a relatively optimistic outlook on the current state of the U.S. economy, but he stated on Tuesday that he is closely monitoring the potential impacts of hurricanes on the Southeastern United States.
Speaking at the Atlanta Consulate Corps luncheon, Bostic said, "The economy we see is performing well, and over time, we are getting closer to our goals."
However, Bostic is not taking this lightly; he is carefully monitoring the risks brought by the latest extreme weather. He pointed out, "In my area alone, over the past two weeks we have experienced these significant weather events, first Hurricane Helene, and now Hurricane Milton approaching Florida." The Federal Reserve district under Bostic's responsibility includes the state of Florida.
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He mentioned that Hurricane Helene has already caused significant destruction and difficulties. Bostic said, "I hope Milton does not cause the same disaster as Helene, but these weather events can also have a significant impact on economic performance. Fundamentally, the destruction caused by these storms can be highly destructive."
He noted that these past storms have affected everything from pecan harvests to housing market trends to homeowner insurance prices. Federal Reserve officials must be prepared to analyze the impact of these events on local and national economies.
Bostic said, "These things are a bit beyond the Federal Reserve's control. So what we need to do is ensure that we first understand what has happened, and then analyze it to assess how things will develop over the next three to six months."
From a broader perspective, Bostic said that the U.S. economy is currently performing quite well in terms of the Federal Reserve's dual mandate—stabilizing prices and achieving maximum sustainable employment. Despite a slowdown in hiring during the summer, the U.S. labor market is not slow.
The September jobs report showed a slight rebound, with non-farm employment increasing by 254,000, and the unemployment rate dropping from 4.3% in July to 4.1%. Bostic said, "The unemployment rate is not out of control."
However, Bostic believes that inflation is still too high. According to the Federal Reserve's preferred measure of inflation—the Personal Consumption Expenditures Price Index—the overall price increase in August was 2.2%, slightly above the Federal Reserve's 2% target. The core inflation rate, excluding food and energy prices, was 2.7% year-over-year.
He said, "I want everyone to understand that I am still focused on achieving the inflation target, ensuring that we can reach the goal." Bostic is currently a voting member of the Federal Open Market Committee.However, Bostic pointed out that the risks in the job market were previously very low, but they have increased now. From a historical perspective, an increase of 1 percentage point in the unemployment rate does not usually stop there. He said, "If this happens, it would be a significant source of concern. As the unemployment rate rises, the risks in employment are also increasing."
Nevertheless, he believes that the risks on both sides of the dual mandate are more balanced at present. He stated that there is currently a risk of the economy being too strong, which could hinder the continued decline in inflation. Bostic noted that Federal Reserve officials are currently in a "multi-risk balance environment," and his task is to "interpret the economic signals and figure out how these risks evolve" in the coming months.
Bostic finally emphasized, "Of course, our primary goal is to restore the inflation rate to 2%, but I hope to minimize the impact on employment."
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