President’s Message: Connecting with the Communities We Serve
The regional structure of the Federal Reserve System is designed, in part, so that the nation’s 12 Federal Reserve banks and their geographically dispersed branches are attuned to and engage with many different constituents across their respective districts.
Here in the Eighth Federal Reserve District, the St. Louis Fed connects with those we serve in a variety of ways. Every day vital conversations about the economy occur, and the St. Louis Fed is listening. Members of our boards of directors provide regular, timely information and perspectives on economic and credit conditions across the District. Another way we connect is through our six advisory councils, whose members represent agribusiness, community development, depository institutions, health care, real estate and transportation. Together, they are a geographically and industry-diverse group of more than 70 volunteers who hail from communities all across our seven-state District. Listening to their viewpoints helps keep us informed about the economic issues they’re facing. We also meet regularly with business, education, community and labor leaders, as well as the general public, to get a direct sense of how they experience the economy.
Outreach is part of the fabric of the Fed’s regional structure. The timely anecdotal information gathered by Reserve banks supplements data on the overall economy that the Federal Open Market Committee considers when deliberating on monetary policy. Such insights are also valuable because macroeconomic data for the U.S. as a whole do not necessarily reflect conditions in particular segments of the economy.
In recent decades, macroeconomic research has become more granular in terms of both theory and data. This has allowed economists to develop models that more accurately reflect differences among the population and across regions. For example, macroeconomic models for a long time included a representative household—that is, one household that stood for everyone in the economy. More modern approaches consider many households that experience the economy—and shocks to the economy—differently.
I have used such a model in recent work with St. Louis Fed economist Riccardo DiCecio.See Bullard, James; and DiCecio, Riccardo. “Optimal Monetary Policy for the Masses.” Working Paper 2019-009C, Federal Reserve Bank of St. Louis, April 2019. We include in our model people of different ages and levels of consumption, income and wealth. In other words, our model factors in various types of inequality. Yet, we are still able to discuss important aspects of the macroeconomy, such as optimal monetary policy and how much people would consume, save and work under it.
Economists at the St. Louis Fed also conduct research using regional data. This allows for analyses of living standards across metropolitan statistical areas, business cycles at the state level, household financial distress by ZIP code, and more.
Our Community Development staff see varied economic outcomes firsthand in their interactions across the District, particularly in low- and moderate-income and underserved communities. One area of focus is the Arkansas and Mississippi Delta region. In 2019, Bank staff and I had the opportunity to accompany Fed Chair Jerome Powell when he visited Itta Bena, Miss., and spoke about economic development in high-poverty rural areas.See Powell, Jerome H. “Encouraging Economic Development in High-Poverty Rural Communities.” Speech given at “Rural Places, Rural Spaces: Closing Financial Services Gaps in Persistent Poverty America,” a policy forum sponsored by Hope Enterprise Corp., Mississippi Valley State University, Itta Bena, Miss., Feb. 12, 2019.
Our 2019 annual report focuses on the St. Louis Fed’s community development efforts, including the Delta Communities initiative and Investment Connection program. This work is helping to shape economic progress in the District. I am hopeful that the insights gleaned by connecting with our communities also find their way into macroeconomic models and, in turn, lead to better tailoring of policies and solutions aimed at promoting better economic outcomes.
President and CEO
Federal Reserve Bank of St. Louis
1See Bullard, James; and DiCecio, Riccardo. “Optimal Monetary Policy for the Masses.” Working Paper 2019-009C, Federal Reserve Bank of St. Louis, April 2019.
2See Powell, Jerome H. “Encouraging Economic Development in High-Poverty Rural Communities.” Speech given at “Rural Places, Rural Spaces: Closing Financial Services Gaps in Persistent Poverty America,” a policy forum sponsored by Hope Enterprise Corp., Mississippi Valley State University, Itta Bena, Miss., Feb. 12, 2019.