The Federal Reserve Bank of Kansas City is responsible for a district that spreads from Western Missouri to Wyoming and a woman from Faucett, Mo., is its President and Chief Executive Officer. Esther George, a Missouri Western State University graduate, spoke to about 235 members of the business community at the Economic Summit Luncheon on Nov. 15.
“The American public’s distrust of people in power is not new,” she said. “It was very core to the design of the Fed. We don’t like concentrated power. We need checks and balances so they were put in place when establishing the Central Bank.”
George said the system’s 12 district presidents are elected by private citizens to help ensure the whole country is fairly represented.
She explained that the Kansas City district is like a snapshot of the country’s economy.
“Colorado is out performing everyone, while in New Mexico, the jobs have not come back there and they’re struggling,” she said.
Agriculture and energy are major drivers in our regional economy and after record incomes through 2014, we’re starting to see some stress in ag, oil and gas. Despite that, consumer confidence still remains high. Households are still continuing to spend, even though businesses aren’t so much and government spending has been flat. Fewer than 5 percent of Americans are unemployed, which is labeled full employment. However, there has been some changes in the job market. She said when she started at the Kansas City Federal Reserve Bank in the 80s that 60 percent of jobs were middle-skilled labor jobs. Now that is 40 percent.
Those employed in high-skilled labor think the economy is fine, while those that have shifted to low-skill jobs can’t afford a $400 household emergency, she said.
George was one of two district presidents to vote for raising the short-term interest rate.
“We’re still today at historically low interest rates,” she said. “This has benefited many borrowers but has been hard on people who rely on savings and pensions. Today’s settings are not normal for a country at full employment.”
The vote was 10-2 to leave interest rates as is. She said that she’ll continue to push to move the interest rate back to a non-emergency level, but without being drastic.
“We need to get started,” she said. “History tells us it there is a very costly outcome eventually (if we keep rates too low for too long). It has cost people millions of jobs.”
When asked by an attendee in the packed ballroom at the Radisson Hotel about what Donald Trump’s presidency might mean for the economy after the stock market went down on Election Night, George said that we’ve actually seen an uptick in the markets in the days since the election, but it’s too soon to tell what could happen during the four years.