Michelle W Bowman: Brief remarks - Fed Listens event on
transitioning to the post-pandemic economy
Brief remarks by Ms Michelle W Bowman, Member of the Board of Governors of the
Federal Reserve System, at the Fed Listens event on transitioning to the
postpandemic economy, Boston, Massachusetts, 31 May 2023.
* * *
It is very good to be here, and to be part of this Fed Listens event and discussion about
the effects of the pandemic experience on the U.S. economy, highlighting challenges in
the labor and housing markets.
While there are many ways to think about the impact of these effects, I find it helpful to
consider both the cyclical or temporary factors and those that are structural and longer
term. As monetary policymakers, we are primarily focused on the cyclical
mattersmeaning how the pandemic and the measures taken to address it complicated
accomplishing our dual-mandate objectives of maximum employment and stable prices.
Making the best monetary policy decisions over the business cycle requires
distinguishing between temporary effects and lasting, structural changes.
Today's agenda includes the employment recovery following the high unemployment
during the spring of 2020 leading to the current tight labor market. Today's labor market
strength reflects policy decisions taken in light of the pandemic experience, including
the widespread lockdowns, reliance upon remote work, and other factors that may have
structurally altered the labor market. I am very much looking forward to the discussion.
I also look forward to learning from the perspectives of today's participants from around
New England about the issues that will be discussed today. I find it especially helpful to
participate in regional discussions to broaden my understanding of economic conditions
throughout the country. This local perspective is one of the great advantages of the
Federal Reserve System's regional structure, and of the Fed Listens initiative, which
complements the Board's efforts to understand national economic conditions.
In 2019, the Board launched Fed Listens with a year of listening sessions with the
public focused on monetary policy and, specifically, on how the Federal Open Market
Committee uses interest rates and other tools to promote a healthy economy. While
data can tell us a lot, learning about the experiences behind those data helps bring
economic data to life for me and for my colleagues. Through Fed Listens and other
engagements with the public, we hear about how Americans are faring in the economy
and about how our policy decisions affect individuals, businesses, and communities. So
our efforts to enhance our ability to listen have continued and have become what I
expect will be, and certainly should be, a permanent feature of the Federal Reserve's
decisionmaking.
Since the pandemic, and with the onset of high inflation, we have seen shifts in the
availability of affordable housing and in the housing market more generally. I'm
interested to hear how these impacts are being felt in New England. The availability and
affordability of housing are critical for families and for communities seeking to attract
new jobs and the workers to fill those new employment opportunities. Distinguishing
between the short-term effects of the pandemic and longer-term structural shifts in the
economy is crucial in making the near-term policy decisions to achieve our
dualmandate goals.
In the near term, higher interest rates intended to lower inflation work most directly in
the housing market. While we expect lower rents will eventually be reflected in inflation
data as new leases make their way into the calculations, the residential real estate
market appears to be rebounding, with home prices leveling out recently, which has
implications for our fight to lower inflation.
The pandemic abruptly changed the lives of most Americans and their families, and it
fed a surge of demand for those who sought larger homes. It ushered in a wave of
homebuilding and renovation that was a significant contributing factor for inflation and
supply chain challenges. Much of that initial inflation has moderated, but it will be
important to understand the long-term effect of the pandemic environment on
household formation and housing demand going forward.
Thank you again, President Collins, for hosting this Fed Listens event and for the
opportunity to be part of this discussion.