Tom Barkin, president and chief executive officer of the Federal Reserve Bank of Richmond, spoke on Mar. 27 at the Appalachian Highlands Economic Forum at East Tennessee State University, addressing current conditions in the U.S. economy and ongoing uncertainties affecting businesses and consumers.
Barkin said that despite some clarity on policy changes such as tax legislation and deregulation, significant uncertainty remains due to factors like artificial intelligence advancements and international conflicts. He described the situation as driving through fog: “A year ago today, I stood before a group like this one and described navigating last year’s economy as trying to drive through fog… That’s what businesses did. They didn’t cut back, but they didn’t lean into new investments either. They didn’t fire, but they didn’t hire. They sat on the side of the road, waiting for the fog to lift.”
The Federal Reserve Bank of Richmond is part of the broader Federal Reserve System representing Maryland, Virginia, North Carolina, South Carolina, the District of Columbia and most of West Virginia according to its official website. The bank works to foster a stable financial system and strong economy through central banking operations according to its official website.
Barkin noted that while GDP grew by 2 percent last year with consumers still spending and unemployment remaining low around 4.4 percent over six months—levels seen only three times in recent decades—the job market feels fragile: “Employment growth is near zero, and younger workers are having a hard time finding jobs in this low-hire economy.” He also pointed out challenges from AI-driven change: “Today, most of the conversation around AI is about job loss… While we have heard few cases of AI-related layoffs in our district thus far, we have heard that the possibility of AI has led to more cautious hiring.” However, Barkin suggested there could be longer-term opportunities for revenue growth if skills mismatches are addressed.
He also discussed inflation trends: “While inflation remains almost a percentage point above our 2 percent target, it has come down meaningfully from its peak of over 7 percent in 2022.” Barkin expressed caution about recent data suggesting progress may stall amid new supply shocks.
The Federal Reserve Bank of Richmond connects with communities via efforts in economic education and development according to its official website. As one regional reserve bank among twelve nationwide—and covering much of the Mid-Atlantic region—it continues working for Americans by promoting sound financial systems according to its official website.
Looking ahead on monetary policy decisions after cutting rates by 175 basis points over eighteen months Barkin said: “At our last meeting… it felt prudent to hold rates and await more clarity on how we should be leaning to best support the economy going forward. I for one am hoping to see some of this fog burn off.”
