Good morning. I'm Michael McKee, the international economics and policy correspondent for Bloomberg, and we are here in Atlanta. Welcome to all of our viewers and listeners around the world on Bloomberg television and radio. We're speaking with the Atlanta Fed President Raphael Bostic, who is retiring at the end of this month. So, this is sort of your HR exit interview.
Mike, it's always good to see you.
I want to ask you, as you travel around your district for the past year, what's the mood like among companies and consumers? We've seen the surveys show that people are getting very, very pessimistic.
Well, I'd say it runs in two ways. So first of all, what has been true throughout the last year is a tremendous amount of resilience on the part of both businesses and consumers. You know, when April 2nd, when the tariffs were announced at very high levels, that put everyone back on their heels and there was a lot of uncertainty. And what's happened through the year is people have figured out ways to deal with that uncertainty. So as for today, I think most businesses and most households are not thinking that the worst of the possible outcomes are going to happen. They're not sure they can get to the best ones, but everyone's trying to find a steady state where they can get through. So I think the sentiment is one of cautious optimism, but I put emphasis on the cautious as opposed to the optimism. I think people are really trying to wait and see what happens.
Well, what do you think that means for the economy?
Well, I think it means that the things that we've seen for the second half of 2025, we will continue to see through 2026. And you know, I've talked to a lot of folks over the last six weeks or so and they said, 'We think our experiences in October, November, December are likely to move on.' And then there are some reasons why they think it might actually get stronger. You know, the tariffs, people have gotten used to those, and so those effects will have run through by the middle of the year. We've seen some of the stimulative aspects of the tax bill last summer, those will be coming on board. And if consumers start to feel like there's more certainty, then I think businesses think there's some upside potential in the economy.
Well, this last week we've gotten a lot of bad news on the employment front with ADP and Challenger and the other numbers that have come out. Does any of that—you don't have another meeting to vote at—but does any of that give you pause about the Fed pausing at this point?
For me, no. I think we've been in a situation where inflation has been too high for too long and by many readings it's been kind of marking time, has been at a plateau well above our target for the better part of two years. That's not acceptable. And for me, I think we can't lose sight of the inflationary concerns. The labor market is very turbulent right now and some of it is because there are some big structural things that are happening in the economy. When I talk to businesses, they're reluctant to hire entry-level people the same ways that they did before because they think things like AI can replace that and they can deploy resources for other things. And I'm hearing that kind of reticence. There's also the reality that during the pandemic a lot of companies ramped up because the demand ramped up and they've been slower to right-size. We see a bunch of that right-sizing happening as well. And then we have issues around the labor supply and whether the immigration shifts are going to be temporary or permanent. And if they're permanent, then we're going to have a lower steady-state job creation. So for all those reasons, I think it's very hard to make a clear statement. And then of course, we don't have a jobs number today, right? So we're not getting the data in a timely basis. My team tells me it'll be April or May before we start to be able to draw clear signals from the data to really understand what's going on.
Yeah, we wanted to wish you a happy non-job day today. You started a long and varied career at the Fed in 1995. Since then, what have you learned about the economy and about inflation?
Well, I think for the economy, one thing that is true is that it is a very complex economy. It is very large and to understand it you really have to get out and see all parts of it. And one of the things that's been great in my role here is I've had a chance to do that. I think it's given me a deeper understanding of just how people engage and experience the economy and how they make decisions to move it forward. In terms of inflation, you know what I've learned is that we really don't want to have inflation, right? Once inflation gets entrenched in people's minds, it changes how the economy evolves. And it's one of the reasons why I think that we need to keep our policy in a restrictive posture so that we get inflation back to 2%. That's paramount. High prices and the prospect of rising prices really do have a lot of families on the edge. And you all have reported a lot about the K-shaped economy. There are lots of families that are feeling very precarious right now and that's a source of concern.
Do you think the economy is becoming more K-shaped?
You know, I don't know more. I mean, it's been that way for a while. Just before the pandemic, I had been talking about this and we were trying to find some metrics to really detail how there's a split. I used to call it the barbell economy where either you were at the high end or at the low end. The K-shape is the same thing. What I know is that there are a lot of families that are precarious and are feeling very uncertain about their prospects for the future and the prospects for their children for that matter. And that concern I think does underlie a bit of the lower and the low consumer confidence that we continue to see being reported. And what we'll need to do is really give people reasons to be optimistic. Show them where the new jobs are coming from and show them how they get the skills to compete for it.
Well, this week Treasury Secretary Bessent said the Fed has lost the confidence of the American people. Do you think you have lost the confidence of the American people in your district? Do you hear people raising questions about that?
That's not been my experience. As I go around the sixth district, people tell me, 'We're grateful for what you're doing. You have a very hard job, and we want you to be as data dependent and as open to information so you can make the best judgment that you can.' Look, the world is very complicated. It's actually more complicated today than has been my whole time here. So, what I think most people understand that and they know that we're doing the best job that we can under very difficult circumstances.
Well, you have a unique perspective because when you took office, the Atlanta Fed in 2017, you were the first black president of a regional Fed bank. Looking back now and hearing the criticism that we get from Washington, do you think the Fed was too woke and perhaps the inclusive employment idea was a mistake?
I don't think so. Look, what we have is an economy that needs to work for everyone and if we're not mindful about the ways that the economy is not working for people then our maximum employment outcome is going to be lower than it can be and it doesn't serve the American people as well as it could. So I think the focus on every American and every American's experience is exactly the thing that the Federal Reserve needs to be doing. That's different than saying that that is unduly influencing our policy decisions. And you know, I will say through this whole episode, the whole time I've been here, you can look at the market predictors and the market projections, they in many instances were more extreme than ours, right? And so I actually think we've been doing the best that we can and we've been data dependent the way we've been for 100 and some odd years. So I don't take on board those arguments.
