President of the Chicago Fed visits Elkhart to get first-hand input on the economy

ELKHART ― Most might think of the Federal Reserve Bank as operating within an ivory tower, analyzing mounds of economic data aimed at keeping the nation’s economy moving forward.

But on Tuesday, Austan Goolsbee dispelled that notion when the new president of the Federal Reserve Bank of Chicago visited the Elkhart area to tour a Jayco RV plant and gain some first-hand knowledge of the area’s business climate by talking with a cross-section of community and business leaders.

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Goolsbee didn't provide any insights on interest rates or other important economic tidbits in his first public speech as president of the Chicago Fed. In a short but entertaining speech, he described what the Fed does and explained why he believes such visits can help economists gain fresh information to go with the data they pore over.

The Seventh Federal Reserve District comprises most or all of Illinois, Indiana, Michigan, Wisconsin and Iowa and regulates banks and provides a range of services for financial institutions ― including the dispensing of new currency ― while also fostering economic growth, among other things.

But the Fed is best known for monetary policy, using some fundamental interest rates to promote maximum employment and stable prices, Goolsbee explained, adding that the job becomes a lot tougher when those two goals conflict.

With a goal of taming inflation, the Fed started boosting interest rates about a year ago while also aiming to avoid a recession by raising them too much or too rapidly.

“It’s always hard in those moments to figure out what’s happening in the economy from the avalanche of data that comes in, and one of the toughest things about it is deciding what to pay attention to," Goolsbee explained.

“And that is the main reason that I came here to Northeast Indiana,” he said, pointing out that incoming economic data generally comes a week, a month or even a quarter after it happens. “So it’s critically important to supplement that kind of traditional economic data with observations in real time, on the ground from the real economy.”

That’s especially true now.

“We need to know how things are going in places at the tip of the spear ― the most Midwest of the Midwest ― which are places like here in Elkhart County,” he said, adding that it’s important to pay attention to the unemployment rate as the demand for RVs has been cooling off.

And it's also important to know whether supply issues are easing for a transmission plant in Kokomo or orthopedic device manufacturers in Warsaw and whether wages are keeping up with inflation, among other things.

“This kind of information on the real economy is important,” he said. “That’s why we do a lot of outreach.”

With at least a couple of additional rate hikes likely coming, there’s no doubt there’s going to be “some bumps in the road in the near future,” Goolsbee said. “This is a strange, unprecedented moment coming out of the pandemic.

“Lots of things in the economy got turned completely on their heads,” he said. “And we need to figure out where they’re going to land and what that is going to mean for the future. But we will figure it out.”

Following his remarks, Goolsbee had a chance to see some of the robots and other advanced manufacturing equipment that students at Ivy Tech’s Elkhart Campus are using to advance their job skills for use in the region’s many factories.

Goolsbee’s visit was arranged by Chris Murphy, chairman and CEO of 1st Source Bank, who also serves as a director of the Chicago Federal Reserve. He said he recommended the visit to Elkhart because it’s a manufacturing hub and the region also has been undergoing major transitions on how it works together.

Seed money from the state, for example, has helped catalyze large community improvement projects aimed at improving the quality of life throughout the region, while other projects have been focused on advancing the region’s manufacturing capabilities and entrepreneurial activities, among other things.

Another boost:Organization awards $40 million in state grants to improve region's quality of place

Should the nation face challenges because of the economy, the region will be better prepared than it would have been several years ago, Murphy said.

"I say our economy is more balanced and better prepared than we have been in our history,” he said. “That’s not to say we won’t have pain, but we are better prepared than we've ever been in the past.”

Email Tribune staff writer Ed Semmler at esemmler@sbtinfo.com.

This article originally appeared on South Bend Tribune: Chicago Fed presidents visits RV plant, talks to leaders in Elkhart