The Fed's Tom Barkin On the Impact of Higher Interest Rates

In this podcast episode, Tracy Alloway and guest co-host Matt Boesler discuss the current state of the US economy with Tom Barkin, the president of the Richmond Fed. They explore topics such as the recent sell-off in the bond market, rising inflation and interest rates, labor market dynamics, the impact of housing on monetary policy, and the interplay between wages and prices. Despite the challenges and uncertainties, the conversation highlights the resilience of the US economy and the importance of incorporating qualitative insights in understanding its performance. The chapter also mentions the hierarchy of jobs and how changes in labor market dynamics are shaping the economic landscape. Higher interest rates are affecting interest-sensitive sectors, but overall business investment remains cautious, and consumption is healthy. The conversation emphasizes the complex relationship between prices, wages, and economic factors, as well as the role of the auto supply chain and the housing sector in shaping the economy. The podcast concludes with discussions on pricing decisions, GDP growth forecasts, potential risks to the US economy, and the Fed's perspective on energy prices and inflation. Main points • The US economy is resilient despite challenges such as rising inflation and interest rates. • Qualitative insights gained from engaging with businesses offer valuable perspectives on the economy's performance. • Labor market dynamics are experiencing significant disruptions, leading to a new hierarchy of jobs and potential wage inflation. • Higher interest rates are affecting interest-sensitive sectors, but consumption remains healthy. • The housing sector and the auto supply chain play roles in shaping the economy. • Pricing decisions have become a tool for businesses to increase profits. • Wages and prices have a complex relationship, with wages sometimes driving prices and vice versa. • The Fed's perspective on energy prices indicates the need to closely monitor their impact on inflation and the broader economy.