On June 28th, CornerCap Wealth Advisors CEO Cannon Carr interviewed Tom Barkin, President of the Federal Reserve of Richmond, about the outlook for inflation, the economy and other key topics.
This interview was featured at the Rotary Club of Atlanta, where Cannon served as President for the fiscal year ending June 30, 2021.
You can view the complete conversation here and highlights from the fireside chat are outlined below:
- Barkin considers current inflation temporary, expecting it to moderate back to normal levels. At some point this fall, for some sectors, we might actually see deflationary periods in the short term as prices adjust from elevated levels. Rental car prices, for example, may adjust from $400 to $50, a more normal level.
- He considers the current environment perhaps most similar to the period following WWII, where we moved from a wartime-constrained economy to a peace-time footing. The country took some time to work through supply constraints as demand surged following the war, but gradually unlocked capacity for a sustained period of growth.
- Embedded expectations are admittedly a wildcard. Wages are up significantly on an annual basis but still generally in line with 2019. Businesses are looking for reassurance from policy makers that inflation is indeed temporary. It’s less about what happens this year (current prices) and more about prices next year. Managing expectations is therefore a key part of policy, in his view.
- He outlined why it is difficult to fill jobs even with unemployment still elevated. He expects the workforce will probably expand again this fall. September should be a revealing month.
- On potential rate increases, he is optimistic on labor expansion and inflation is trending above target, so we might expect rate increases to happen sooner than late 2023.
- He also provided views on the possible impact of infrastructure spending, productivity improvements, minimum wage expectations, and digital currencies.
Please reach out with any questions.