Fed Chair Jerome Powell, left, and Kevin Schreiber, CEO of the York County Economic Alliance, walk in York, Pennsylvania on Oct. 2. Powell met with workers and employers regarding efforts to strengthen the local economy. (AP Photo: Christpher Rugaber)
In an unusual move, Federal Reserve Chair Jerome Powell and Patrick Harker, head of the Federal Reserve Bank of Philadelphia, took a break from their usual consultations with economists and financial experts to engage directly with small business owners in York, Pennsylvania. Their visit aimed to understand the challenges faced by these entrepreneurs in the post-pandemic economy, shedding light on the real-world impact of issues such as inflation, high interest rates, labor shortages, and supply chain disruptions.
During their discussions, business owners expressed a mix of optimism and concern. Many entrepreneurs highlighted persistent difficulties in finding enough workers and the hindrances posed by increased interest rates, making expansion challenging. Higher costs and ongoing supply chain problems also featured prominently in their grievances, creating an unpredictable business environment.
Julie Flinchbaugh Keene, co-owner of Flinchbaugh’s Orchard & Farm Market, voiced the frustration felt by many, stating, “We were a little blind-sided by inflation. Predictability is just gone. It’s very hard to operate a business without predictability.”
Powell, in response to their concerns, assured the business community that efforts were underway to address inflation and restore stability.
The visit coincided with the Fed’s ongoing efforts to strike a balance between cooling inflation and avoiding a deep recession. Recent meetings indicated the Fed’s confidence in achieving a “soft landing,” with inflation expected to drop to approximately 2.6% by the end of 2024. Despite this confidence, the Fed also signaled plans to maintain a higher benchmark interest rate, potentially raising it again this year and keeping it above 5% into 2024.
Childcare shortages emerged as a significant concern, keeping many parents out of the workforce. Kevin Schreiber, CEO of the York County Economic Alliance, emphasized the challenges faced by businesses due to the decline in childcare centers and subsequent staffing shortages, hindering economic participation.
Tom Palisin, executive director of The Manufacturer’s Association, noted that higher interest rates led many local companies to delay acquisitions and investments, reflecting a cautious approach among businesses in the face of economic uncertainties.
Powell’s direct engagement with small business owners underscores the Federal Reserve’s commitment to understanding the grassroots impact of economic policies. The insights gained from this visit will likely influence the Fed’s decisions as it continues to navigate the complexities of the post-pandemic economy. Stay tuned for updates on the Fed’s strategies and their impact on businesses as the economic landscape evolves.
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