michelle w bowman : the view from here - the outlook for the u. s. economy and implications for monetary policy speech by ms michelle w bowman, member of the board of governors of the federal reserve system, at the dykhouse scholar program speakers series in money, banking, and regulation at south dakota state university, brookings, south dakota, 13 october 2021. * * * it has been a privilege to travel across and explore this beautiful state over the past several days and to be here in brookings with you this evening. and i ’ m pleased to have the opportunity to share with you, the students of south dakota state university ( sdsu ), my experience as a member of the federal reserve board of governors and my outlook for the u. s. economy. 1 today i will speak to you about my outlook for the u. s. economy and what the federal reserve has been doing to support economic activity during the covid - 19 pandemic recovery. i will also touch on a few details about what i ’ ve learned of the economic conditions here in south dakota. over the past few days, i ’ ve had the opportunity to meet with a number of business and community leaders here in your state. beginning on monday in rapid city, i made a quick predawn visit to mount rushmore on tuesday while en route to a native american indian reservation. later in the day, i met with state, business, and tribal leaders in pierre, and here in brookings earlier today. hearing directly about the successes and challenges from their perspective provides important context for understanding economic conditions that cannot be obtained from economic data. these conversations help us see through the data from the eyes of the people, businesses, and communities that make up the american economy. that information is very helpful to me and to us at the federal reserve as we make our policy decisions. but before i turn to the outlook and its implications for federal reserve decisions, let me share some basics about the fed ’ s responsibilities and how we carry out those responsibilities. as students of economics, you may already know that the federal reserve conducts monetary policy to support a strong and stable economy in the united states. our official mandate from the congress is to pursue two goals, maximum employment and stable prices. together, we commonly refer to these objectives as our dual mandate, and pursuing both at the same time means that we seek the maximum level of employment that is consistent with price stability. regarding the price - stability goal, our framework

time filling jobs. i was told one ethanol plant needed to fill 15 jobs and got four applicants. in contrast, indicators of labor demand, such as unfilled job openings, remain exceptionally strong. on balance, i anticipate that employment will continue to move up in the months ahead, although for several reasons that are unrelated to the stance of monetary policy, i don ’ t expect that we will see employment fully return to prepandemic levels any time soon. first, despite all of the economic progress, it is clear that switching off economic activity for such a long period has had lasting consequences, and expectations of a smooth resumption of production, transportation, and business operations may not be met for some time. many workers that were initially laid off temporarily have left the workforce altogether, which is especially true for women, with nearly 2 million women leaving the workforce since the pandemic began. in addition, many older workers dislocated by the pandemic effectively retired and probably will not rejoin the workforce even in a much stronger job market. while i would not want to place too much weight on one or two months of data, the most recent reports on employment and anecdotal reports from a wide range of businesses suggest that, even when offering higher wages and signing bonuses, many employers are finding it difficult to fill open positions. history tells us that the longer workers remain out of the workforce, the less likely it is that they will return to employment and the greater the likelihood that they will lose skills and connections with the job market, which could weigh on labor force participation for years to come. the federal reserve ’ s policy tools are useful for promoting a strong job market, but they are not well suited to addressing these harmful effects on labor supply. another reason for my cautious outlook for employment growth is that, while large firms have adequate resources, funding options, and flexibility to withstand pandemic - related disruptions, many small businesses without those advantages have closed permanently. i continue to hear concern about the future from small business owners, which is also reflected in the latest readings from broader surveys of small business sentiment. while many factors lead to this perspective, i have heard specific reference to continued rising costs, supply chain issues, labor 3 / 6 bis central bankers'speeches shortages, and uncertainty about other factors, like tax increases and vaccine mandates. let me turn now to our other monetary policy goal, price stability. earlier this year, as the economy was reopen