US Factory Orders Data Show Rebound In August

Thank you for that kind introduction. I thought I would share my sense of the economy today and where it may be headed. These are my thoughts only and not those of anyone else on the Federal Open Market Committee or in the Federal Reserve System. I hope you will give me some grace as we have been operating with limited government data for almost seven weeks. I like analogies, so I’ve been describing operating with limited data as trying to bring a boat to shore in the pitch black and having the lighthouse go dark. You can assume you’re on the same course for a short while. You can try to navigate by lantern. But you can’t ignore the fact that you don’t have much visibility, you might lose your bearings and there may be hazards up ahead. The good news is that we aren’t navigating blind. We have other ways to keep a pulse on the economy. Private sector data help. For the most part, they aren't as definitive nor as calibrated, but they can highlight big shifts in economic conditions. In addition, the Fed benefits from collecting real-time information directly from the communities we serve. The Richmond Fed set up our extensive outreach efforts because we recognized that even government data has its drawbacks. It’s backward-looking. It’s revised multiple times. It’s aggregated, so it often doesn’t capture underlying nuance. To address these gaps, each year my outreach team connects with thousands of business and community leaders; this year, we are on track to meet with about 4,000. We get thousands more responses through our regional surveys of business activity, as well as The CFO Survey. This outreach helps us understand the economy better, as well as anticipate turning points we might otherwise miss. In 2020, businesses in Bristol told us of packed shopping malls across the Tennessee border where shutdown rules had lifted; pent-up demand was coming. In 2022, furniture manufacturers told us sales were slowing; the goods boom was cooling. In 2023, firms told us they’d keep testing price increases; pricing psychology had shifted from “no chance” before COVID-19 to “no crime in trying.” RICHMOND FED'S BARKIN/SHENANDOAH U: 'A LOT TO LEARN' BEFORE DEC FOMC; 'WILL WANT TO THROTTLE BACK UNTIL YOU GET MORE VISIBILITY' #Barkin #FederalReserve #economy Fed's Barkin: Inflation is above target, but it's not likely to accelerate. Fed's Barkin: The labor market is softening, but I don't think it will soften that much more. BARKIN SAYS POLICY IS STILL MODESTLY RESTRICTIVE

I am pleased to be here today to discuss a core part of the Federal Reserve's mission: banking supervision.1 Much of what the Fed does to conduct monetary policy, promote a stable financial system, provide a safe and efficient payments system, and support consumers and community development depends on a healthy banking system. Lending fuels entrepreneurship, helps families buy homes, and enables communities to thrive—all critical aspects of a healthy economy. Ensuring banks operate in a safe and sound manner is essential because the banking system sits at the center of the economy. That is why banks' risk-taking must always be guided by clear guardrails, underpinned by effective banking supervision. We need these guardrails because experience shows that market discipline alone does not prevent excessive risk-taking by banks.2 As I've noted before, time and again, periods of relative financial calm have led to efforts to weaken regulation and supervision.3 This has often had dire consequences, as we saw prominently during the Global Financial Crisis. In the midst of that crisis, I saw first-hand in my own community in Michigan what weak regulation and supervision could mean: foreclosed homes, shuttered businesses, and lost jobs. According to the Federal Reserve Bank of Chicago, Michigan's unemployment rate was 14.9 percent in 2009, meaning one in seven workers were out of jobs.4 Nationwide, the consequences were immense: nearly 9 million jobs lost, 8 million homes foreclosed upon, and a $17 trillion loss in household wealth.5 We are now, I believe, at a moment of inflection in the regulatory and supervisory approaches that help keep banks healthy. There are growing pressures to weaken supervision—to scale back examiner coverage, to dilute ratings systems, and to redefine "unsafe and unsound"—in ways that will make it harder for examiners to act before it is too late to prevent a build-up of excessive risk. These pressures present real dangers to the American people. The Mission of Banking Supervision Let me begin with the mission of bank supervision, which is to promote a safe, sound, and efficient banking system that supports a strong economy.6 Our banking system relies on trust. That trust is earned when banks behave responsibly and when supervisors effectively perform their statutory duties. These duties include verifying that banks are operating soundly and identifying and addressing weaknesses before they threaten the solvency of particular Fed's Barr: Bank supervision relies on credible ratings and strong staff. Fed's Barr: Moves to weaken bank supervision present real dangers.

*BARKIN: AGREE WITH POWELL DEC. RATE CUT NOT FOREGONE CONCLUSION