Economy Matters

In recent remarks in Red Bay, Alabama, Atlanta Fed president Raphael Bostic used everyday language to discuss complex economic topics.

In a moderated question-and-answer session on August 13, Bostic's dispensed with jargon and embodied the Federal Reserve's continuing efforts to be open and transparent in explaining its outlook on the economy and steps it will take to promote maximum employment and stable prices.

In 1987, former Fed chair Alan Greenspan famously told Congress, "If I seem unduly clear to you, you must have misunderstood what I said." However, Bostic told the audience in Red Bay, "Nothing we're doing is intended to be a secret. We want everybody to know everything that we're doing."

Timmy James, the retired dean of academic affairs at Northwest Shoals Community College, in Muscle Shoals, moderated the conversation with Bostic, which occurred midway through Bostic's three-day tour of the Red Bay area. James began by asking Bostic what prompted him to visit Franklin County, home to around 32,000 people in a mostly rural region adjacent to Mississippi and a dozen or so miles south of Tennessee. A member of the audience would later say he thinks Bostic is the first Fed president to visit Franklin County. Bostic ended his response by noting that he enjoys meeting and talking with people, after he had explained the purpose of his visit to Red Bay.

"Over the course of the visit here, we're going to talk to business leaders, we're going to talk to bankers, we're going to talk to community leaders," Bostic said. "We're going to see some of the important businesses here just to understand how business happens, how people make their way. I will remember many parts of this visit, and it'll come to my mind as I think about what we [at the Fed] should be doing for policy. These things are super valuable for what I do."

Red Bay is just the latest community Bostic has visited since joining the Atlanta Fed in 2017. The trips provide him an opportunity to learn from locals and share with them his perspectives on the economy and Fed activities. The visits hew to a similar itinerary: tours of major employers, meetings with civic and business leaders and bankers, and participation in a question-and-answer session. Bostic's postpandemic visits include Miami; Florida's Space Coast; Meridian, Mississippi; Jacksonville, Mobile, and Hale County.

Bostic is an old hand at discussing economics in everyday language, a skill honed during his 17 years as a classroom lecturer and professor, mostly at the University of Southern California (USC). When Bostic wasn't working in academia, he served the public as an economist at the Federal Reserve Board of Governors and as an executive in policy and research at the US Department of Housing and Urban Development. Bostic left USC to accept the appointment as Atlanta Fed president in 2017, and he was reappointed to a second five-year term in 2021.

Brad Bolton, president and CEO of Community Spirit Bank, in Red Bay, said Bostic was well-received and events were well-attended. Bolton first met Bostic when Bolton served on the Atlanta Fed's Community Depository Institutions Advisory Council. "The reoccurring theme I heard from folks during and after the event, in the days that followed, is how approachable Raphael was, how laid back he was in being comfortable in talking in Main Street terms, and just his openness and willingness to really listen, connect, and learn about the issues facing our Main Street businesses and manufacturing base," Bolton said.

"Raphael truly is empathetic to the rural versus urban challenges and opportunities that face us, and it shows in his knowledge of the issues rural communities face," he added. "His tenor and tone are welcoming—it's never a lecture. It's always a mutual opportunity to learn from each other."

Bostic's half-hour chat with James was followed by questions from the audience, and the Atlanta Fed president addressed a wide range of topics. Here are some highlights:

On tariffs

"In textbook economics, a tariff, when implemented, is a shift in the price. If the tariff is implemented on a Monday, it happens Monday and everybody knows what the new price is, and you go back to doing what you do. Nothing fundamental has changed in how the economy actually works. This isn't that straightforward. The tariff regime has been changing continuously and today is not finished. That's the source of uncertainty.

"The second thing is these tariffs are intended to change supply chains, to change who you source your goods from, which means the post-tariff world is not the same as the pre-tariff world. It's actually a different economy."

On job training

"In every community, the key employers are different, the needs for what skills they want from the workforce are not the same.

"We found, in going around the country, that in many places there's a disconnect between the employers, who know the jobs they're going to need tomorrow, and the educational providers who may not know in detail what kind of training sequence and skill sets need to be developed. Then the workers need to know that there are these opportunities out there. If you don't have all three, then it's really hard to have a robust workforce development or labor market development infrastructure. We try to facilitate those types of conversations."

On cryptocurrency

"To have [federal payments] go out as a digital currency, instead of sending dollars that were appropriated through the Congress, we would be able to just send a digital dollar. In order for that to work, we'd have to be able to manage the money supply somehow. We'd have to have some serial number, or some way to track every one of those digital dollars to have an idea about the money supply and how we think about things.

"If we were able to do that, the implication is we would be able to know where every American was spending their money and track that. I have never proposed this, just for the record. My sense is that that would not be well-received."

On the benefits cliff

"For those not familiar with the benefits cliff, many public supports are structured so that as you get more income, you hit a threshold and then, if you get an extra dollar, you lose a dollar of benefit. We call that the benefits cliff and it is a disincentive to a pathway to self-sufficiency.

"Our team built some tools to help people see the cliffs and then maybe build better plans to address them. One of the things that's happened here in Alabama is that we have a partnership where the CLIFF tool [the Atlanta Fed's Career Ladder Identifier and Financial Forecaster suite of tools] is now something that is certified to be used by all workforce planning agencies in the state to try to help create a different conversation with people who are leveraging those things."

On economic modeling

"We have a lot of conversations that begin, 'OK, if you were absolutely, positively forced to have one scenario [about the economy], what would you choose?' The conversation maybe yields out five scenarios that make sense. Then you put probabilities on them and then you can start to see the average of those might pull the earth to a different place. You try to triangulate that way, recognizing there's still a lot of uncertainties, the band of possibilities is quite large. We do that in house but, at the end of the day, what we think actually doesn't matter. We are not driving the economy. You all are.

"We've reoriented how we interact with businesses and the public. We'll provide, or present, three or four scenarios and ask, 'How many think the first one is most likely to happen? How many think the second one?' That's actually real information because, ultimately, the outcome is going to be a function of what business leaders decide to do, what consumers decide to do—not me and my economists."

David Pendered

Staff writer for Economy Matters