An illuminating moment of the Federal Reserve’s first town hall-style meeting with community development leaders in Dallas on Monday came near the end of the session.
An audience member wondered whether the U.S. central bank might provide funds for a bus service to ferry workers across town to a cluster of higher-paying jobs.
Dallas Fed President Rob Kaplan said he often talked with his Fed colleagues about such “structural issues” like inadequate transportation that shackle the U.S. economy.
Do these discussions “turn into dollars?” the questioner asked.
The answer: Well, no.
Of course, Kaplan put a braver, and kinder, face on his answer. But there was no getting around the bottom line. The Fed is not the type of bank that provides funds for bus services, however well-intentioned.
Congress has given the Fed a mandate to keep inflation stable and unemployment low, through its monetary policy. Transportation woes in a community are solved and funded by Congress and state and local governments.
As a result, on issues such as poverty, the central bank attempts a rough form of “community outreach.” In Kaplan’s words, the Dallas Fed can “convene” and be a “catalyst” for change.
The unmet needs of the low-income residents of South Dallas were articulated clearly to Fed officials during the two hour gathering.
Students need ways to get home from quality after-school programs. Many seniors are reliant of Social Security for their only income and they are often fleeced by close relatives. Workers who desperately need cars to get to work end up in “subterranean” subprime loans that ruin their credit and impoverish them further. Young workers find their credit is impaired because their parents used their Social Security numbers to open utility bills that were never paid. And so on. It could be Cleveland, Oakland, Calif., or Bangor, Maine.
What is striking is that these unmet needs come in Texas, long considered a bright spot on the economic landscape.
It was only last August that Kaplan noted that Texas had the second highest rate of job growth of all 50 states for the first seven months of 2018.
Fed officials plan to conduct more listening sessions this year to assess current monetary policy practices.
At the town hall, the Fed officials said that they can try to guide the economy in ways that may help.
Fed Vice Chairman Richard Clarida said the South Dallas region can benefit from “a hot” labor market. This was another argument for the Fed to be patient about any further interest-rate hikes and not worry so much about higher inflation.