While noting that the national economy is recovering at a record rate, Michelle Bowman, a member of the board of governors with the Federal Reserve System, nevertheless is concerned about the threat that inflation poses to that same recovery.
Speaking on June 23 at a policy summit hosted by the Fed, Bowman noted that “in recent months inflation has risen to well over the Federal Reserve’s longer-run goal of 2%.”
“This rise has reflected, in part, the fact that inflation numbers at the onset of the pandemic were very low,” Bowman said.
But the rise in inflation is also the product of an “impressive upswing in economic activity that has played an important role as it has led to a number of supply chain bottlenecks and put upward pressure on prices for many goods.”
“These upward price pressures may ease as the bottlenecks are worked out,” Bowman continued, although she added that it “could take some time.”
Despite such challenges, Bowman said she has remained impressed with what she describes as the nation’s “economic resilience.”
Noting that both urban and rural America are confronted with the same growth issues, Bowman said, “One key element to community resiliency is the engagement of local financial institutions in providing access to credit and supporting small businesses with funding and technical assistance.”
Those financial institutions have proven to be especially vital to the survival of small businesses, said Bowman, noting: “An environment that supports resilient small businesses means more jobs and economic growth in local communities—both urban and rural.”
Bowman, formerly the bank commissioner for the State of Kansas, noted that the country’s small businesses in the last decade created more than 10 million new jobs, accounting for some 65% of employment growth in rural counties.
“Creating and encouraging an environment that supports small business growth and entrepreneurship is a vital component of economic vitality,” continued Bowman, one that leads to a “more advanced broad-based recovery.”
As part of the Federal Reserve’s determination to understand the challenges of the country’s small businesses, the agency has just announced that it will continue its Fed Listens initiative, launched during the early months of the pandemic and designed to solicit the views of small businesses, among other community stakeholders, “on issues related to our monetary policy goals.”
By Garry Boulard
