michelle w bowman : the pandemic ’ s effect on the economy and banking speech ( via webcast ) by ms michelle w bowman, member of the board of governors of the federal reserve system, at the kansas bankers association ceo and senior management forum / annual meeting, topeka, kansas, 26 august 2020. * * * good afternoon. it ’ s great to be with you, and i look forward to our discussion. as you all know, the covid - 19 pandemic has caused significant disruption and hardship in nearly every aspect of our lives, and it continues to weigh heavily on our national economy, which is why it will be the central focus of my remarks here today. let me set the stage for our discussion by outlining the economic effects of the pandemic most relevant to the banking sector, describing the federal reserve ’ s response to the crisis, and then making some observations about conditions for smaller banks. the pandemic ’ s effects on the economy and banking we began this year with the economy in excellent shape — by some measures the strongest in decades. from my seat as a monetary policymaker, we appeared to be in a good position regarding both legs of our dual mandate, which are maximum employment and stable prices. but that picture was dramatically altered with the onset of the covid - 19 pandemic. efforts to contain the spread of the virus caused a sudden stop in economic activity during march and april. while the extent of the closures and shutdowns varied widely throughout the country, the sudden loss of employment and the contraction in output were like nothing our nation has experienced before. the decline in activity was mostly due to temporary business closures, and the economy has bounced back noticeably in recent months as businesses reopen and fiscal support was distributed to many americans. even so, the economy is still far from back to normal. the future course and timing of the recovery is still highly uncertain, and its pace and intensity are likely to vary across areas of the country — heavily influenced by the decisions of state and local governments. that speaks to another aspect of this episode that is unusual — how the timing and severity of the pandemic ’ s impact seem to differ greatly from one area to the next. among kansas ’ s major industries, oil and gas production and equipment manufacturing have been hurt by the worldwide slump in energy demand. aviation manufacturing has been hit hard by the downturn and by the uncertainty over the recovery in air travel. agriculture continues to face

particularly those with credit concentrations in higher risk or stressed industries. finally, we will continue to be sensitive to the capacity of each bank to participate in examinations and strive to prevent undue burden on banks struggling with crisisrelated operational challenges. the road ahead like many native kansans, i am an eternal optimist, so let me end my formal remarks on a hopeful note. while the road ahead is highly uncertain, and we don ’ t yet know when the economy will return to its previous strength, america will recover from this crisis, as it has from all of our past challenges. our economic fundamentals are strong, and we have the solid foundation of the entrepreneurial spirit and resiliency of the american people. for its part, the federal reserve will continue to monitor progress and respond promptly and flexibly to support the recovery. we will closely watch economic and financial conditions, and we will use our monetary policy tools to respond as appropriate to pursue our dual mandate of maximum employment and price stability. we will also remain open to further adjustments to supervisory schedules and expectations, as needed. thank you for the opportunity to speak with you today. i look forward to our discussion. 1 board of governors of the federal reserve system, report on the economic well - being of u. s. households in 2019 – may 2020 ( washington : board of governors, may 2020 ). 4 / 4 bis central bankers'speeches