Richmond Fed President Tom Barkin: With Demand Healthy and Inflation Stubborn, Policy Should Move With Care
GREER, S.C. — Federal Reserve Bank of Richmond President Tom Barkin delivered prepared remarks titled "The Rooms Driving the Economy" to the Greater Greer Chamber of Commerce at Greer City Hall in South Carolina on November 9. He said economic decisions are made not in a single meeting room in Washington but in boardrooms, kitchens and airport lounges across the country, and that with demand healthy and inflation stubbornly elevated, the direction of monetary policy is relatively straightforward, though policy should move with care given risks to the demand outlook.
On business, Barkin said earnings this year have been remarkable: median S&P 500 earnings grew 15 percent in the second quarter and aggregate earnings grew 31 percent, with third-quarter results coming in comparably, while business investment rose 12.7 percent in the third quarter, driven in part by super intelligence (SI) buildout and defense, with bankers reporting loan demand extending beyond SI. Healthy firms are reluctant to lay off workers, and initial unemployment claims sit at more than 55-year lows. But he noted broad-based cost pressures, from health insurance, gas and diesel to trucking, ocean freight, business travel, memory chips, interest rates and tariffs, and said firms are starting to pass on increases they had absorbed.
On households, he said the University of Michigan consumer sentiment index recorded its five lowest months ever this year, inflation has run above the Fed's 2 percent target for over five years, and September PCE inflation came in at 3.6 percent headline and 3.1 percent core. Yet nominal consumption excluding food and energy has grown at a 6.9 percent annualized rate over the last six months, October unemployment was 4.1 percent, extending the longest recorded streak at or below 4.5 percent, and more than 40 percent of upper-income consumers expect to spend as usual on items with large price increases, more than double the share of lower-income consumers.
Barkin said resilient demand paired with broad cost increases has put upward pressure on prices, and that if the economy stays on its current path, the risk lies on the inflation side of the Fed's dual mandate. He flagged the path of SI as a key two-sided risk: underdelivery could pull back investment, stock prices and asset-fueled spending, while overdelivery could displace more workers than expected. Barkin serves on the Federal Open Market Committee and becomes a voting member in 2027.
(Source: Federal Reserve Bank of Richmond)
Source: Federal Reserve Bank of Richmond
Published by GSM · USA (original Chinese edition)
Photo: 图：美国联邦储备委员会总部大楼（GSM 固定图库）。 / Photo: Federal Reserve Board headquarters (GSM asset library).
