Martha Perine Beard went out on a high note Wednesday.
In Columbus to speak at the Kiwanis Club luncheon at Lion Hills Center Wednesday, the now former official with the Federal Reserve informed her audience about how the Federal Reserve is organized and provided an update on the state of the national economy as “the Fed” sees it.
At the end of her talk, she made one last revelation.
“About four or five months ago, I announced that I would be retiring, but would stay on until a replacement was chosen,” said Beard, the Senior Executive Officer for the Memphis branch of the St. Louis Federal Reserve Bank. “My replacement has been named so, unless something emerges that requires my attention between now and when I get back to Memphis, this will be my last official act in my 44 years with the Fed.”
Based on the portrait she painted of the nation’s economy Wednesday, she leaves under pretty good circumstances.
“When you look at the big picture, things are pretty encouraging,” Beard said. “We’ve seen steady growth in the job market, consumer confidence is high and inflation should remain below the 0-to-2 percent target range.”
Beard pointed to several key indicators as evidence of a healthy, growing economy.
“In 2014, economic growth was 2.5 percent, down slightly from the 3.1 percent in 2013,” she said. “Weaker growth in business equipment investment and in housing were the main reasons for that decline, but another factor was the extreme weather we saw in the first quarter of 2014. In fact, we’ve had the same weather factors come into play this year, as you all know so we may, at some point, have to start considering the weather conditions in our forecasts if we continue to have severe weather conditions going forward.”
Even with the slow-down caused by the severe winter, most indicators suggest that the economy is moving forward, she said.
“Unemployment is at 5.5 percent, which is exceptionally strong and very positive for the economy,” she said. It wasn’t that long ago that we saw double-digit unemployment, so we’ve made tremendous progress there, even better than we forecasted.”
Another key indicator, consumer confidence –which is measured by consumer spending — is growing, too, something she attributes, at least in part, to the fall of oil prices.
“The fall in oil prices has to be one of the biggest influences on what we are seeing in our economy,” she said. “It doesn’t take an expert to figure that out. Everybody sees it. When you go to the pump and pay $1 less than you used to pay, that’s money in your pocket.
“And when you have a little extra money in your pocket, you’re a little more confident. You’re more likely to spend that extra money than save it because you’re more optimistic about what lies ahead.”
Beard said the Fed estimates economic growth of 3 percent through the end of the year.
“Once you get to that level, you really begin to see the improvement,” she said.
Beard also took some time to explain how the Fed is organized.
“Probably most people, when they think of the Federal Reserve, all they know or hear about is the chairman, Janet Yellen,” Beard said. “But the decisions made by the Fed aren’t made by the chairman alone. We have a seven-member board of governors in Washington, although there are currently two seats that haven’t been filled. The Board of Governors is based in Washington.
At next level are the presidents of the 12 Reserve Districts, which are located throughout the country.
They meet with the Board of Governors eight times each year to make policy decisions. Most of the focus is on the interest rates.”
In her role in Memphis, Beard’s area includes parts of Arkansas, Tennessee and Mississippi and reports to the St. Louis Federal Reserve Bank.
“At my level, one of the most important functions is to report to the St. Louis president about the economic conditions in my area. He, in turn, uses the information we provide when he goes to Washington to meet with the other presidents and Board of Governors. That helps them make decisions based not just on what’s happening in a few areas, but everywhere.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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