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[Music] [Applause] [Music] so [Music] so [Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] so [Music] [Applause] [Music] [Applause] [Music] me [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] so [Music] so [Music] [Music] so [Music] [Music] [Applause] [Music] so [Music] so [Music] so [Music] so [Music] [Music] [Music] [Music] [Music] welcome everyone this is the fifth and final day of our super economic summit and i can't get over how quickly this week has gone by if you've missed any of the sessions or want to share them with friends and colleagues you'll find video recordings of all the main panels and discussions and speakers on our website at cpr.stanford.edu for anyone who's joining us for the first time this week i'm mark duggan the triony director of the stanford institute for economic policy research and i'm incredibly grateful for your participation in the summit and your support of our mission at cpr to catalyze and promote research that is meant to have a direct impact on economic policy making i'm thrilled to be closing this week with a keynote address from rafael bostic rafael is the president of the federal reserve bank in atlanta and there's so much ground we can cover in our conversation that will follow his presentation and i'm also really looking forward to the questions that you'll be able to send in through the link that should be on your screens raphael has been serving as the 15th president and ceo of the atlanta fed since june of 2017. he oversees the bank's monetary policy bank supervision and regulation and payment services he's a participant on the fed's open market committee before running the atlanta fed raphael was a department chair and professor at the seoul price school of public policy at the university of southern california he also was the assistant secretary for policy development research at the u.s department of housing and urban development between 2009 and 2012 and worked at the federal reserve board of governors before that as an economist and then a senior economist in the monetary and financial studies section of course the most important part of his career was getting his phd in economics here at stanford i can go on and on about his career in academia and in public service along with his many accomplishments but i think we're all eager to hear what rafael has to say about the state of the economy and where he sees things going after a very devastating year during the past year so let me turn things over to you president bostic raf and i hope you've got some good news for us uh take it away well thank you very much mark it's really good to see you and it's good to be here it's good to be able to be part of this summit this is uh one of the things that i you know super i actually really appreciated uh the support they gave me as a student and the insights and opportunities that i got uh as a graduate student there and uh my days in palo alto are still fond and uh so it's really good to be there next time i talk to a stanford crowd hopefully it will be in person so i can enjoy those palo alto days and the sunshine and the warmth uh what i thought i would do today is is just talk a little bit about what i'm seeing in terms of how the economy uh has performed pretty much during the pandemic uh and and provides really a framework for thinking about what policy should look like going forward so i'm going to spend a lot of time talking about what's happened over the past 12 months uh and then then turn to policy at the back end and then i'm really looking forward to the the conversation uh and the and the question and answer session that's that's oftentimes the most fulfilling part of these type of talks for the speaker as well as for the audience so so good afternoon everyone and it's really good to be here when i you know when i think about the the economic performance of uh the last year i think it's really important to start before the virus hit us uh and just remind people about where we were in the very early months of 2020 the economy was growing moderately and you know the vote it was the longest uh post-war period of growth that we had seen we were into our 11th year of continuous expansion but when people looked at the economy job growth was slowing but it was still producing uh jobs at at a much greater rate than is needed to absorb the new entrance into the economy uh the labor force was growing and importantly the unemployment rate for african americans and and others who had been more uh weakly attached to the economy had started to really move in a positive way and we had started to see a reduction in the in the employment gap between uh white workers and and african american workers in the country uh and this was really a positive thing and you know i think about a year ago um actually it's a year ago next week that we and at the atlanta fed decided that we were going to shut the building down by and large and have people work remotely but before that you know the idea of the virus being a problem uh was still sort of a notional idea and so when i when i look back at some of the documents you may know that the fed puts submits on monetary policy report to congress twice a year every six months and one of them once in february and once in august and i look back at the february report and this is what we wrote downside risks to the u.s outlook seem to have receded in the latter part of the year which was the latter part of 2019 as the conflicts over trade policy diminished somewhat economic growth abroad showed signs of stabilizing and financial conditions eased and here's the last sentence more recently possible spillovers from the effects of the coronavirus in china have presented a new risk to the outlook so when we entered at this point like a year ago things were pretty solid we were in a reasonably strong position there were economic challenges for sure but i don't think anybody really could appreciate uh what the virus would bring to the economy uh sadly we've had numerous waves of the cova infection uh wave that has struck us and we had to take public health responses to address that uh that challenge and that then changed the economic outlook considerably and left us in a place where we had to shut down a lot of businesses and we saw historic economic contractions now we at the fed reacted quickly and i have to say i was very pleased that chair powell provided tremendous leadership in having us take steps to keep financial markets functioning we lowered their fed funds rate we opened a bunch of facilities and really provided a back stop for for many financial markets and by a large they worked but at the same time there was tremendous economic disruption uh gdp gross domestic product fell by 10 in the first half of 2020 which is a sharper downturn than we saw in the great recession and headline employment uh spiked to a 14.8 percent level in april which was the worst reading since world war ii no it wasn't clear how we were going to respond it was it's very interesting in our textbooks in my textbooks at stanford we didn't have a chapter on pandemic responses so we really did need to just let things happen and really be ready to respond as necessary uh and we were i was pleased to see that economic activity responded very very nicely uh in the late spring and early summer states and localities these restrictions and people and businesses really adapted to the covered reality we saw lots of job growth and we saw that a lot of people came back into the workforce now unfortunately we didn't keep the virus under control and when that happened in the fall uh we saw that the momentum that we had before uh really diminish uh as people uh retrans they reduce their spending on services like restaurants and go into theaters and movies and other activities that involve large gatherings now all of this is summarized on slide one so i would ask that we uh show the first slide just to to demonstrate uh what uh we're talking about so then not the next one and what you'll see on the the next slide which is the chart is that um you saw the big drop in spending in a march and april uh and then you see the the recovery and the upward growth in that recovery is really significant uh and then you see it toward the end of the year in in september october and november uh things leveling off uh and actually declining in some instances um that corresponds directly to uh the the re emergence of the virus as a problem one thing to note here is that the patterns of spending and the recovery did not have it happen evenly i'll talk more about this but spending by households really shifted to buy things rather than to buy services like concrete things for in the home and and likewise now if you think about all of last year all of 2020 gdp declined by 2.5 percent two and a half percent that's not as bad as many expected uh but even with that uh payroll employment in january was almost 10 million jobs below what we saw uh in those months just before the pandemic hit and the unemployment rate uh remained at it is about 6.3 percent which is pretty high now we just had a job support today it was a very positive one but even with that the number of jobs short that we face is about 9.5 million nine and a half million jobs that's a large number now i will also say that that doesn't tell the whole story in terms of the damage to the labor market uh as a lot of people dropped out of the economy uh dropped out of the labor force and we lost about four and a half million people exiting the labor force for that reason as well now surveys we we really try to dig into this and surveys and other data have told us that there are three reasons why people have dropped out of the labor force one is that they've been really afraid that they're going to get sick and that's a serious concern the second is uh there's been a degree of hopelessness that has emerged in the sense that if you're in particular sectors like restaurants or hotels or entertainment venues uh there are a number what we've seen is that there the workers there are starting to feel like those those opportunities are not going to emerge again and then third and you may have seen stories on this many parents particularly women have been compelled to stay at home to take care of kids their children as schools have not been open and kids have had to do school from home all of these are significant reasons uh why the labor force participation rate is much lower and if you take those people into account with the basic unemployment rate what you get is an aggregate broader unemployment picture that's around 10 which is pretty high and it rivals sort of what we saw at the at the worst periods of the great recession now because the the nature of this this recession and this crisis is quite different there's a real issue about to what extent is the disruption that we're seeing a function of or things that are going to be permanent or going to remain temporary and the two areas where i worry about this a lot is one is healthy small businesses pre-virus um not being able to survive the covet period so we lose businesses that were viable and then the second is to see uh this labor force participation drop become permanent where people leave the the labor force and the workforce completely now this is the basic story that's the top-line picture of what we have but the one thing i did want to say and it's an important thing to keep in mind as we consider policy moving forward is that there is a signature characteristic of our pandemic pandemic driven economic crisis and that is the unevenness of impact now when i talk about the economy and the nature of the recovery you know i've referred to it as something of a less than recovery where less than refers to a less than less than sign that you would have in math you know that that sideways v that that shows that some parts go up and other parts go down now on the upward slope of that less than symbol uh we have a number of uh occupations and professions we have uh service providers that that provide goods for the home you think about home depot you think about you know amazon those sorts of companies that are well positioned to serve the needs that you would see in a large work from home posture and you also have people that work in businesses uh that are able to work at home so if you had workers that were able to work from home then they could continue to produce they could continue to provide their value add to the economy and continue to grow moving forward now we also have on the bottom side uh a bunch of businesses and business sectors where they require people to come together and what we've seen is that those those sectors have taken uh the biggest hits and they've had the slowest recoveries now we can show this on the next slide uh where we look at uh employment by occupation over this time over this time period and what you see here uh the blue line shows that uh that that people working in low-skill jobs and low skill jobs is a term that is used in the academic research you should think about it as jobs in the traditional service sector they had the biggest job losses and you see they started to recover and rebound pretty strongly but that that faltered in the winter and the fall as the virus uh re-emerged and so for that segment of the economy things have actually degraded pretty considerably uh since the the fall whereas if you had jobs in sort of a skill sector like management or professional services or in the trades construction or production of those sorts of things you pretty much leveled off and stabilized i would note that since the virus is re-emerged stabilization is the best we've seen we've not seen a continued growth and so it really does emphasize the point that this is a a virus driven economy right now more than anything else now i also thought it would be helpful to note that what we are do that we're experiencing here in this this recession is really quite different than what happens in most recessions so if we go to the next slide uh what we show here is what happened in terms of where the job losses occurred in the great recession which are the gray bars as opposed to in the current recession which are the orange bars and what you will see here is that in the great recession all the job loss or the predominant the great predominance of the job loss was in that middle skill segment and if you looked at the low skill segment um that's a negative number there that means that jobs were actually grew the number of jobs in that sector grew during the great recession now you contrast that with the current experience we're in that low jobs segment with that where jobs were growing we've seen a tremendous reversal and the loss there has been uh in terms of number of jobs at a level comparable to what we've seen in middle school uh the middle school job sector this is a tremendous change and it really means that the recovery and how we respond to the recovery is going to have to be different than what we have seen and considered in previous uh recessions and we can also talk about this in terms of wage levels and if you look at if you think about where jobs have have been lost they've historically been lost uh sort of in the middle of the distribution here again people at the lowest end of the job district of the wage distribution have seen the the greatest job loss if you had if you're in the top quarter of wage earners since february of last year the the amount of employment is down about four percent if you're in the bottom part of the distribution that bottom fourth the number of jobs that have been lost is 17 a tremendous difference in terms of this experience now this experience this disparity also is true if you look at things by race and if we go to the next slide uh we we try to show this for you uh this shows the the percent of job losses uh by uh people of different ethnicities and what we show here is that for if you're a non-hispanic white worker uh the number of jobs down is about four and a half percent but if you're in any of the ethnic groups here whether it be african-americans or hispanics or asians uh the amount of job losses is much much greater uh and this is a just a a truth and a fact of where we are and i'll say one of my economists at our bank julie hotchkiss has done some research that suggests that this covert recession has reversed and actually fully reversed the labor market process progress of black americans uh that i mentioned was was really occurring at the end of the great recession so it's been devastating to african-american uh the african-american workforce uh and it's something that we definitely have to keep in mind now i will also say that um research is accumulating uh that that's really suggesting that in addition to just this unevenness there are some structural changes that appear to be happening in the economy uh and that the many of the people who are losing jobs uh that are in industries and like hospitality and food service they may be in a place where those jobs are not going to come back in the same numbers and they might need to to learn new skills and this could be difficult and costly uh for those those those workers as well as for our economy and a word that comes to mind in this is the word reallocation which is a word that is should be familiar to some of you at stanford because of the uh there is work that is being done by a stanford professor in collaboration with us here at the atlanta fed as well as professors from the university of chicago we put together a survey of business uncertainty where we survey businesses consistently to get a sense of what they're experiencing in terms of jobs and sales for uh for the future and what their responses recently have suggested are things that really indicate that we're going to have structural change they're going to substantially reduce their business travel even after the pandemic that has significant implications for the labor market and the macro economy but they're also expecting that the experiences that they've seen during this this covet pandemic are likely to continue so if we if we pull up the next chart i'm going to this chart shows some pictures about what we mean and what's happened in terms of what authors what the authors call excess reallocation now what i like to think of this as is really like a churn rate like how experience is in terms of the amount of uh of performance in terms of hiring or the sales that that is happening above a long run average and what we what we show here is that the churn has increased dramatically since the pandemic you see it in sales things have the churn has doubled uh since uh 2020 and really what i take this as is a signal that the winners uh when they win they're winning bigger and those that are struggling are actually struggling harder relative to what was happening pre-pandemic and this this idea of the winners winning bigger really means that there's going to be a reallocation of labor and expenditure toward those sectors now one key point that we get from this survey that is not shown in the chart in the chart but i think is really critical to understand is that the survey respondents are not expecting this churn to decline immediately so the winners are going to continue to be the winners and those that are struggling are going to continue to struggle really consistent with our less than sign or less than recovery narrative and this is significant because if this holds for an extended period of time uh it really does suggest that we're going to have to invest pretty significantly in helping workers or re-skill themselves uh get out of those industries that are potentially not going to recover to the same extent and that reality has really been a driving force for some of the things we've been doing uh at our bank we've stand we've stood up a center for workforce and economic opportunity and you can see you can find that online and what we've done through that is is really try to identify uh workforce development efforts that have worked and also form a number of partnerships uh that are aimed at streamlining how the country uh country's workforce development system uh works and and try to to get it to be much more functional and much more muscular so that we can uh help workers that are in those industries that may not be recovering robustly get to a new place one thing i'd like to call out on this regard is the rework america alliance it's a partnership we have with the marco foundation and major companies labor unions public interest groups and others and what we're trying to do there is really at a local level create an ecosystem or an infrastructure that really is established is is focused on uh getting workers to be aware of where the job sectors that are growing are as well as aware of pathways to getting skills so they can be competitive in that area it's those sorts of things that i think are very very important and will become more important particularly if this churn continues and this split between the halves and the have nots continues to be at such a wide level now with all that there's a lot of challenges there's a lot that's going on i do have reasons to be optimistic and and one is that because of what's happening in the public health space now as i've said this is a public health problem first and foremost we've seen labor markets respond to how the virus has progressed and so if we can get that virus contained then i think that we can start to see recovery happen in a very robust way now one thing that you should also you should all recognize is that uh the number of new covert cases and hospitalizations has been falling as it's fallen well uh below where we were in the december and early january period and the pace of vaccinations is improving if we can continue to go in that trajectory and enough of the public vaccinated uh gets vaccinated then the recovery can occur in a very vigorous way because the confidence that people have will be high and the end of our ability to really get back to going to restaurants and doing all the things that happen when we get together uh will recover another thing i would say on in this regard and i've seen this uh in the context that i've had with business leaders at with families is that there's pent up demands to do a lot of things uh many people who have been well fortunate enough to be able to continue working through the pandemic they have resources and money to spend their savings rates have gone up uh and because of the fiscal support and relief there is resources there are resources that are available and people are really ready to use those resources to get back to some of the normal things that they've seen in their lives and my staff and their canvassing of the economy is really starting to see evidence of this return to high levels of demand we've seen we're seeing increased future bookings at resorts and and restaurants i saw a report the other day that cruise lines are seeing uh record bookings as well to really suggest that that people are hungry to get out and be social and that once they have sort of a green light to do that we might expect there to be pretty robust uh economic activity and growth now my baseline forecast for gdp growth is five to six percent in 2021 that is higher than where we've been uh for many years but i think that that is uh not an unreasonable expectation but even with that growth uh we won't back to be back to pre-pandemic economic trajectories i'm projecting until the second half of 2022. now all this really does assume that we don't have setbacks in terms of the virus or the vaccine distribution if that happens then the growth um and our return to pre-pandemic levels uh could uh be pushed back now so let me just close with a reflection on our policy and i would just say i think our stance is appropriate that we definitely need to be continuing to provide robust support for the economy and while some might look at the top line number and think that we're fine and that our momentum is taking us to a place where uh we are in a good place i do think it's important to recognize and understand that this really does mask the unev the unevenness of experiences as well as the reality that there remains considerable distress in our economy and in many communities that level of distress rivals the distress that we saw during the great recession so i always get to ask sort of when are you going to move like like when when should we expect you to change your policies i would just say there are three things that i would point to one is really how fast we return to uh uh full employment and that's one of our mandates we're a long way from that today we're nine and a half million jobs short of where we were pre pandemic and not just in and the issue here is not just in terms of the numbers but also the character of job loss now i have one more slide to show which i'm going to put up here and this really does speak to the the character of that job loss um what you see here is that and i want you to focus on that that uh that that blue area in the top but that is the number of workers or the share of our our employment um that is for people who have been out of work 27 weeks or more that is a long time and all economic research really suggests that if you're out of work that long it is difficult or more difficult for you to get reattached to the economy so when we have that kind of dynamic it's going to be important that we don't forget those people and make sure that that we do all we can to make sure that they can get reattached clearly inflation is important right now it's difficult to tease out a real signal of underlying inflation but we have to always be mindful about what's happening with the price level and the third thing i wanted to point to is that we're going to be guided or i'll be guided by our long run monetary policy framework um this framework we adopted a new one in august and it says we're going to allow the economy to run hotter than than we might otherwise because when that's happened we have not seen it be accompanied by spikes of inflation which might suggest that the economy is overheating given that reality i think i'll be comfortable letting the economy run hot uh and let inflation actually get above two percent for some time two percent as our target um before i really show any sorts of concern and and on that that point you know we've been below two percent for a long time and so the question is sort of how much or how long would you expect to be above the two percent moving forward for me i think i'm comfortable being about two percent for quite a while as long as the trajectory of inflation above two percent uh is not uh one that seems to be spiraling away from that that anchor so as long as that's happening i think that that uh we can continue to provide some ample and strong support for the economy and and i won't be too troubled by that the last thing i would just say is we're ready and able and i think you saw this at the very beginning of the crisis to support the recovery as long and as as strongly as necessary underlying all our work is really that we need to do all we can to minimize the long-term damage from the pandemic crisis and work to make sure that the recovery is as broad-based and as inclusive as possible so let me stop there uh mark you want to come back and let's have a little conversation that's great uh thanks so much ralph that was uh so uh interesting and packed with tons of information and i have a lot of great questions from the audience but i'm going to ask you uh some of my own first and we'll start with there's a lot of weighty questions that i that i'll ask but let's start with a fun one so you've moved to atlanta pretty recently and i'm curious as a sports fan have you yet become a braves or a falcons or a hawks fan so the short answer is no and you know you know what so you know i have my own history so uh so in baseball i'm a mets fan so mets and braves they don't really get along so well uh and then the falcons i'm a dolphins fan don't ask how that happened there's a whole thing on that and then for the hawks i'm a sixers fan i grew up in south jersey near philadelphia so and i'm i'm pretty hardcore in the sense that once i have a team that's my team so um i i'm owning my history and you know the folks here have come to terms with that okay very interesting um i want to hear the dolphin story sometime as a as a patriot person but um anyway so as and the timing today for your presentation is really perfect because at least for me because in my econ one class this morning just before this we've been we started talking about monetary policy um and you know i talked about the different regions um and you know you one of the 12 regions is is that you cover is the lana fed region and so i'm curious as the president of the atlanta fed how do you see the differences across the country in terms of employment and output and other economic measures so you know it's very interesting um every district has its own character and if i had to characterize the sixth district i'm in the south the greater southeast so florida georgia alabama parts of tennessee louisiana and mississippi are the economies of that district really mirrors the u.s economy in terms of the the range of activities and the size of those particular activities so we're not heavily driven by finance or by energy or by tech we have the proportions that you see across the entire country but the one thing i would also say is that within our district we see a lot of variations so we have touristy tourist locations we have miami and new orleans and orlando we have a large military presence we have manufacturing uh we do have energy in louisiana uh and out into the gulf so we're really a microcosm for the whole economy i think it's it's very help helpful for me in terms of getting a sense of the big picture about what's going on that's great okay thanks so much and so uh and this is interesting because out here in california we have we're at or near the top in terms of unemployment rate i don't know if you call it top or bottom but there's uh there has been it's been uh kind of a struggle out here economically for us we're not alone hawaii nevada been hit pretty hard too but um so i want to ask now about some the long-term effects from the pandemic and you touched on this a little bit but i just want to try to drill down a little deeper on this what changes do you think will happen to the economy which industries and workers will win and who will uh who will lose in the long run you know it's this is a question that we continually ask and it's it's actually very interesting you know i think one area where we've got it we're going to see a large amount of change is where work gets done i know for us we are really wrestling with the question of how many of our workers do we need to have in the building on a regular basis or or how many can just work from home or are we going to have some sort of hybrid situation that is a conversation that's happening in companies all over the country and the answers to that will will have large implications for things like uh like office space commercial real estate um how you think about investments in capital so businesses investments in computers and technology to allow people to communicate um and also you know you look at businesses like like the amazons and the services that bring goods to the house those will all be important i also think about the flip side and businesses finding ways to deliver their services from more of a remote posture i look at hospitals for example some hospitals in our hospital systems in our district when we talked to them they said pre-pandemic only three percent of our patient contacts were through telehealth now we're at almost a third are through telehealth and that has real implications for you know what they need in terms of their space but also in terms of the supportive activities that happen around the hospital you may not need as much in terms of a parking deck or in terms of restaurants or in terms of flowers and the like because people won't be coming in nearly as much uh and so that cascading will will uh play out in a pretty significant way i think those are also interesting and then the other one i would i would say is um we we've heard from a number of businesses particularly take restaurants for example m that they're rethinking how they integrate technology into their businesses and that can have real implications for the types of jobs that uh they need for example the use of a tablet to order or ordering remotely uh means that they may not need as many workers on on-site uh and those sorts of issues are also being uh wrestled with across the board so i think this then that really is part of that churn that that reallocation i was talking about uh that you're we're going to see a number of these uh industries that may continue to operate need different kinds of workers and different numbers of workers uh and i think there will be some some segments that emerge but there are going to be others that probably won't come back great thanks for that uh next question has to do with sort of thinking about retraining workers so the economy is clearly changing a lot and you very eloquently uh displayed that and and described that just a few moments ago but um how will what will this do to the need to retrain workers throughout the course of their careers and and um so yeah curious about your thoughts on that well you know when i was growing up it used to be the case that people expected they would have one job it would be in a company plant and they would pretty much do something similar to what they were doing for their entire work career and that started breaking down and i think what we've gotten to now is that it's completely broken down and there isn't an expectation that you're going to be at the same place for a long time or even that you'll have the same type of job for a long time and what that means the phrase is lifelong learning or or reskilling or however when you you want to talk about it that is becoming more important and that will i think is going to become the way that we live and operate and what that will mean is that we are going to need to have a retraining infrastructure a workforce development infrastructure that facilitates that because the numbers that we're talking about are just going to be greater and the the skill shifts that that we need are going to be larger than what we've seen historically and so if we just leave this to each individual worker to figure this out uh my fear is that it's going to take far longer than we then is optimal for us to see workers find the right jobs get those skills and allow us to continue to be productive so i actually think that um this is this this is one of the key issues uh as we think about the economy moving forward and us collectively maintaining our standard of living we've got to make sure that every worker in america is engaged great thanks very much for that uh the next thing i want to talk about and you and you uh touched on this a bit in your in your slides is uh differences in the sort of income and corresponding wealth gap between different races in the us i'm curious you know as a president of a uh one of the 12 uh fed federal reserve banks what role do you think the federal reserve system should play in mitigating the wealth and income gap between uh different races and are there other systemic issues that the fed can help mitigate yeah so i i've been fairly outspoken on this i actually do think that the fed does have a role to play here uh and in part it's with the things that we do directly so i think our policies can be important to help reduce the employment gap in particular which can allow african americans and latinos and others to have jobs that pay them uh living wages uh and it gives it puts positions and to actually start to build wealth because if you don't have a job it's hard to to actually become wealthy and so you've got to start there and we know historically there have been large gaps and this is one of the reasons why we change the long-run monetary framework to acknowledge that you know our monetary policy has a role to play in making sure that everyone has a chance to be included in our economy uh and and prosper and and be productive now the other reality is that many of the gaps that exist are due to things and long-term policies that we don't have direct uh control over but to me i think that just says that we still need to call them out and bring others into the conversation to see that that those who do have an ability to to shape things uh are thinking about that so we for example have uh stood up a racism in the economy series webinar series i hope uh all of our viewers are aware of this if you have art you can google racism in the economy federal reserve and you'll see that we've had four segments on this and in each of these we've talked about um structural racial barriers that have prevented african americans and native americans and latinos and asian americans from fully participating in aspects of our economy and that's holding us all back collectively so because we have an interest in having our economy be as strong and as robust as possible i think we do have an interest in talking about these issues to try to get these barriers reduced or removed so that we can be collectively more productive and more resilient uh and more innovative and entrepreneurial so i think this is an important thing for us to do and because we are um you know we're more neutral arbiter we're not going to benefit personally i'm not going to get rich from this i think we have an opportunity to really lift up the things that work and and get traction in the policy space great thanks very much for that um and to some extent related to this um so you are unfortunately too rare an example of an african-american phd economist and i'm curious this is something that's very much on our minds uh i think in the economics profession generally and here at stanford for sure too what do you think are the best things that we at stanford and elsewhere within the economics profession and academia can do to increase interest and success among african-american hispanic and students from other underrepresented minority groups and phd programs and beyond you know mark the i like the way you ask the question because you really talked about interest first and we have to make sure that that you know african-americans hispanics native americans women as well um are actually interested in it and you know one of the concerns i have is that too often uh people in those those categories are getting negative reinforcement early in their their lives about their ability uh to participate in this and and that aren't getting exposed in ways that are positive so i think that's a first step you know what we're doing at our bank is uh we're starting an initiative where we are putting together curricula on this for fifth graders and for eighth graders we're starting super as early as we can to try to create an environment where by the time they get to uh senior year in high school they already know that they can do this stuff and they are interested in it enough so that when they get to the stanfords uh and the usc's and and and wherever georgia techs are or whatever you want to talk about econ is on the list of things that they might want to explore we got to do that first then once we get people to college uh we need to make sure that there's an environment around them that makes it clear that we want them to be there that we want to support them and that their perspective is is is valuable and interesting for us uh i think that's an important second part we know that for african americans and and others um that first year in college the second year in college of your first generation those are extremely hard years and you can feel isolation in a way that uh will lead you to not to to withdraw and not engage and then we lose those kids we need to make sure that we are really attentive and purposeful and intentional that we're going to keep people uh and that we're going to wrap around them the uh an infrastructure so they can really let their talents blossom i think that's going to be an important uh thing that that everyone has to think about wonderful thanks so much for that ralph and just this is gonna be my final question then i have a ton from the audience so i've got some great ones but i have a personal incentive to get a good answer for this one so i'm teaching my e-commerce students right now about monetary policy next week and what are the two things you would most like for me to make sure to mention to them when i talk about the fed beyond the standard you know things i might otherwise neglect to mention um yeah so one thing is you know the fed is more than just monetary policy and you know we do bank regulation and we also do a fair amount of outreach into communities to try to really help them overcome their barriers i think people are not as aware of the wide range of things that the federal reserve does and the ways that it touches people uh and then this the second thing i think i would say is um and is related is that you know we are trying as much as possible uh to understand um the the barriers to success and and what sorts of things are needed uh for our economy to continue to grow and continue to be a leader and that is things around innovation and productivity uh and um industrial organization like the how that the economy works uh so that we can really have a better sense of of what our policies are likely to do as they um diffuse through the economy okay terrific thanks very much and i've got this written down for uh from monday monday 10 am so this is this is terrific so uh so a lot of great questions from the audience and i doubt i'll be able to get to all of them but let me start off with this one do you think the fed will be able to remove some of the stimulus from the economy without any negative effects um boy that's a hard question um so uh i'm hope i'm hopeful that that will be the case you know what i what i expect and hope is that uh by the time we get to the place where removal of our accommodation starts uh the economy will be very close to full employment uh our our growth will be robust and there will be a lot of confidence collectively about uh how the economy is likely to perform moving forward which should translate into the economy could stand on its own without needing that that that that support to the extent that that happens i think we can really pull back and not see a lot of adverse uh impacts on the economy uh and that's one of the things that we're going to try to to affect as as we move forward over the next couple of years great thanks for that um and then uh getting a little more potentially into the fiscal policy arena how worried are you about the ballooning deficit and corresponding debt potentially rising interest rates making the deficit even worse well you know you have to be worried about the deficit and you have to be worrying about debt i guess for me i think we have a short run problem that we have to deal with first and that is getting through the this pandemic and making sure that uh the damage that has been that has occurred does not become a large-scale permanent kind of damage well you know i think about all the relief as trying to provide a bridge for families and businesses so when we get to the other side they're as close to where they were pre pandemic as possible if that happens then our growth can be robust but if we don't take care of that bridge and a lot of families and businesses fall through uh the damage and the pain that they're going to be in is going to be a lot greater and the whole we will have to get out of will be that much deeper so for me i i want to make sure we do as as good as we can on the short run problem uh and then that should position us to be better at addressing the the longer run problem which is the deficit in a bit um i do think there's going to have to be a reckoning on that eventually but that's a couple pages down in the book right now we have to really take care of where we are today okay thanks for that um somewhat related to this is a question what type of multiplier would you apply to the 1.9 trillion dollar stimulus many economists don't think it will have the desired effect because so much of it will be saved so in part this depends on the the distribution of the the funds so some of it will go to families that will use it to deliver right so they'll take the funds and they'll pay down some of their debt so they're positioned in a stronger position moving forward some of it will be used by families that really do have immediate real time needs in terms of their housing and in terms of food and in terms of clothing you know one of things been very interesting through this pandemic because of the relief i believe we've not seen an eviction crisis we've not seen foreclosures that have spiked when i talk to lenders you know they tell me that their mortgage portfolios are performing very solidly and even families that were in forbearance programs um they're paying as as as uh as expected on time so i think that there's that but there are other components here some of it is some of the funds are going to be devoted as i understand it to vaccine distribution that's hugely important and to the extent that that happens in a robust way that's going to mean that we start seeing things recover faster some of it will go to help state and local governments who have suffered because there hasn't been sales taxes and other revenues and they will then be able to support the the distribution of the vaccine in a more robust way as well so i do think some of these have a way to to flow through um that are indirect uh and could lead to and contribute to more acceleration but for an exact multiply i don't have a number for you but i you know i do think it's it's uh it's uh it's not zero great thanks raphael um next question has to do with aging populations in the u.s and around the world um that they've caused the growth of working age adults to essentially flatten or even decline in some countries and this might suggest lower economic potential going forward and may limit the stimulative impact of lower interest rates is there much the fed or any central bank can do to promote given this backdrop or uh this is from the question is larry summers right and ben bernanke's speech at aea last january represented the last hurrah of central bankers [Laughter] so yeah so i don't think we're dead yet so i'll just i'll just say that you know and what i would say is if you look at what's happened through the pandemic i think our positioning from policy has been incredibly important in providing a sense of stability and uh and a backstop that is uh really important for um for how the economy has performed and so so the presence and the existence of the central bank has been has been very important uh i do think though that you know the monetary policy is not the only policy out there and we are not all powerful to accomplish all things and if you think about the aging of the population and keeping our workers productive that's going to require investments in technology and other things so that our workers can continue to be productive or even increase their productivity on a per person basis and so you know we're going to need to have all the the the um the levers of policy engaged in this uh and this is an important uh consideration moving forward okay great thanks so much for that um one of the things i think you may know about this that we take a lot of pride in here at stanford is our uh summer institute for high school teachers to equip them to hopefully help them teach uh their their students who are taking economics better i have a question here i believe possibly from from one of those teachers um i'm a teacher and i was discussing with my students the new framework that the fed is adopting to help narrow the racial economic gap and one of my students asked this question and i was hoping you could address it how will this reform hold up against a large segment of labor workers being substituted by ai and technology uh will there be any protection in favor of these racially diverse workers against outsourcing to other countries and of course you know automation so that's a that's a complicated question there's a lot in there um here's what i would say i've been doing a bit of canvassing of our district to try to understand hat the introduction of technology will mean for uh for jobs and the availability of jobs and uh in many instances when i when i talk to people to leaders and businesses that have factories or production centers where they are automating what they tell me is that even though the old jobs go away there are new jobs that emerge and in some instances in many instances the numbers are comparable the challenge we have is that the skills required for those new jobs are very very different than the skills that are required for the old jobs and that takes us back to the job retraining issue this question is actually very insightful because i'm not asked the question exactly that way but one of the things that that i do know is that you know employers are sensitive to the fact that they have a workforce and that they don't want to just in some instances just leave them by the wayside and so you know i've talked to some employers who uh have started retraining programs for their own workers to give them their first dibs on the new jobs moving forward but i think this is a larger issue uh that that really merits more conversation so it's a very very good question and it's really on the cutting edge of i think how uh the economy is evolving great uh thanks for that ralph uh another question coming in from a different angle on a different issue so while the board of governors of the fed is appointed by the president and confirmed by the senate the presidents of the 12 regional banks are appointed by a group of private sector representatives regular americans don't have a seat at the table in regard to leadership of their regional federal reserve despite the fact that the fed makes decisions that strongly influence their personal finances given this as a regional bank president do you think the president regional president appointment process should be reformed and if so how well i i'm actually not going to agree with the of the the opening premise i actually do think that you know every president and the operation of the federal reserve banks uh is predicated on the notion that we are uh organizations that are in informed by uh that are governed by and that are um overseen by um the broader economy in our our society you know i spend a lot of time going around talking to uh to locals and i'm account i feel accountable to them our performance is is really uh determined by how our economy performs and that's that's communities that's firms that's families it's everybody so so i think that the notion that um that we just sit sit somewhere else and and make some judgments without feeling accountable or engaging with uh with regular people i don't think that's true now i do think that we don't talk about this nearly enough uh and this is one of the things that uh emerged actually in one of the racism in the economy series discussions about the beige book which is you know our our regular uh reporting out at the reserve banks of what we're seeing in the economy uh we don't often articulate uh how much we engage with a diversity of of slices of the broader economy and um we are doing those things so mark that might be another thing that you add when you talk about the fed that we do actually try to be informed by a wide diversity of voices and perspectives and thinking about what appropriate policy should look like that's great i'm going to write that down right after i ask this next question for you and this is a question from a former classmate of yours from your phd days i'm in trouble now yeah right does the federal reserve worry about the stock market as much as people seem to think so i should answer this question uh short no uh um look our mandates are a maximum employment and price stability and you know i try to stay really focused on that the stock market can give at times a signal that there may be some risk-taking that we need to pay attention to but ultimately um our measures are what they are and we're going to stay focused on that um and that's that's particularly important today you know the stock market's gone one direction and if you look at the employment prospects we're not in a half million jobs short so you know in the note that given that choice i'm gonna focus on the nine and a half million jobs and try to make sure that we do all we can to get those back excellent uh now i've got i've got a ton of questions i'm not gonna be able to get to all of them but let me just try to and i apologize if you asked a great question and i didn't get to it i apologize there's been a lot of great ones so next question here all of your colleagues at the fed have been asked a variation of the yield curve control or operation twist question their responses have generally been there's no need for the fed to respond to rising bond yields at this juncture do you concur with this sentiment do you believe there's a middle ground such as strengthening foreign guidance to make it clear the fed would take uh measures to keep long-term rates low and support the economic expansion so i'm pretty much where my colleagues are on this you know inflation has not been uh a real stress point in terms of the economic performance for for quite a long time and um the signals that i'm getting right now are don't suggest that that has changed so i'm pretty much where where my colleagues are on that um but we continue to monitor you know our our bank right pre-pandemic had just developed sort of an inflation dashboard to to really measure and monitor and report out on the ver a various a variety of measures of inflation uh because we want people to know that we do think about this um but right now we're not i don't feel like we're in a crisis point uh terrific uh and we're we're getting close to being out of time i'm gonna try to get one possibly uh two more questions uh in but uh another question is has the fed factored in any additional political risks in 2021-22 so i so first of all i gotta speak for me i can't speak for the whole fifth but i would say you know what we try to do and what i instruct our team to do is is pay attention to what we're hearing out in the field if businesses are concerned about political risk and it's changing and affecting their their behavior we have to take that on board if families are doing the same thing we have to take that on board i do think right now uh their risk is is focused heavily on what's happening in terms of viral progression that is the dominant risk that we have right now and uh it looks like the relief package will go through that uncertainty is receding uh and so that's really where the political space comes in in terms of how i'm trying to understand where we should be and how the economy is going to progress okay great uh one last question is and you sort of touched on this a bit earlier but maybe you can just uh revisit it if you didn't quite uh get can monetary policy address the disparate effects of the cobid related downturn on low-skilled jobs uh monetary policy alone can't cancel that but one of the things that we have tried to do is is use our resources to really put a spotlight on those effects and try to get that information in front of policy makers who can do things more aggressively so we started up a survey right at the beginning of the pandemic focused on lower income communities and minority communities where we were starting to see those impacts and as we've gotten feedback on that survey about sort of the nature of pain and the duration the expected duration of that pain we tried to get in front of policymakers and say look this is important and as you think about your relief packages try to craft some policies to acknowledge that and to take that into account so that we don't leave those communities behind because uh as i said before anyone who's left behind where this becomes permanent um that's extra stuff we're gonna have to do um in the long run moving forward terrific um and uh looks like we are at one o'clock and i so wish we had uh some more time uh but i'm afraid that we unfortunately need to wrap things up i'm so excited to share this with my econ one students i think they're gonna benefit enormously from it and and and raphael this was such a fantastic presentation and discussion and it was really generous of you to take the time to be with us here today especially with all that's happening in the world uh this also brings us to an end of the main sessions of this year's super economic summit and i just want to thank everyone so much for participating our panelists our keynote speakers and everyone who participated by sending in comments and watching really made this an amazing event and i also want to give a very very very very very special thank you to the amazing staff at sieber uh every person who worked so hard to make this happen under such challenging circumstances i'm incredibly grateful for all of their hard work um and now if you've registered for our exclusive super associate sessions there's one more place for you to go in just a few minutes i'll be having a conversation with john taylor to talk some more about macroeconomic policy and you can join us for that session on the summit event platform so again thank you so much to everyone for joining us thank you raf for joining us all the way from atlanta today and i hope that we can do this next year in person and that we'll be able to see you in person sometime soon thanks so much all right take care thank you [Music] you