Federal Reserve officials often get economic advice from top Ph.D. economists in Washington.
On Monday, October 2, 2023, Kevin Schreiber, CEO of the York County Economic Alliance, and Federal Reserve Chair Jerome Powell, on the left, stroll around York, Pennsylvania. Powell held meetings with York laborers, companies, and community leaders to discuss initiatives aimed at bolstering the local economy. (Source: Daily Independent)
Small Business Owners’ Say on Post-Pandemic Issues
On Monday in York, Pennsylvania, Chair Jerome Powell heard from small-business owners who are struggling with inflation, high-interest rates, labor shortages, and other post-pandemic issues. Powell and Philadelphia Federal Reserve Bank president Patrick Harker visited York to learn about the city’s diversification efforts.
The businesspeople they spoke with were hopeful yet worried about obtaining enough labor. Some have stopped expansion because of higher financing rates. High prices and supply shortages persist. “We were a little blind-sided by inflation,” said Julie Flinchbaugh Keene, co-owner of Flinchbaugh’s Orchard & Farm Market, who spoke to Powell and Harker at Gather 256 while they walked. She said the pandemic three years ago had eliminated predictability. Running a business without certainty is difficult.”
Her parents operated the firm in the 1980s through significant inflation, Keene said. However, the company was significantly smaller and unstaffed. So, her father answered, “I don’t have any wisdom to give you.” “We’ll get inflation down,” Powell stated after hearing her concerns. Powell encountered Jennifer Heasley, owner of Sweet Mama’s Mambo Sauce, a York Central Market food kiosk while touring downtown York.
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Uncontrollable Interest and Inflation Rate
Before his visit, Heasley stated she would encourage Powell to lower interest rates. Heasley said her credit cards, which she uses to fund her business, now had higher rates. Powell’s visit came as the Fed monitors the economy for evidence that its rate hikes are working and inflation is cooling. In their last meeting two weeks ago, Fed policymakers expressed confidence in a “soft landing,” in which inflation would fall to 2% without a major recession. Policymakers expected inflation would fall to 2.6% by 2024 with a slight unemployment rate increase.
Given its confidence in the economy’s resiliency, the Fed indicated that it may raise its benchmark rate again this year and maintain it at 5% through 2024. After four decades, inflation fell to 3.7% in August from 9.1% in June 2022. While the economy grew, unemployment remained low, defying predictions. Powell and Harker led a roundtable conversation with company owners, CEOs, nonprofit leaders, and educators before the walking tour.
Business development group York County Economic Alliance CEO Kevin Schreiber told reporters that the local economy is growing well. Schreiber said many businesspeople are apprehensive about the next 12 to 18 months and whether interest rates will continue high and inflation won’t be adequately controlled. Schreiber said a lack of childcare keeps many parents out of the workforce, making it another major issue for local businesses. Schreiber reported 219 childcare centers before the pandemic. Only 170 remain. Due to staffing constraints, many remaining centers are underutilized.
After the meeting, The Manufacturer’s Association executive director Tom Palisin said increased interest rates had caused many local companies to curtail acquisitions and technological investments.
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