Small Business Owners Share Concerns on Inflation and Interest Rates with Federal Reserve Chair Powell

by Ryan Lee
Federal Reserve Visit

While Federal Reserve officials usually rely on the expertise of prominent economists in Washington for economic data and forecasts, Chair Jerome Powell recently received input from an entirely different sector: small business owners confronting real-time issues such as inflation, elevated interest rates, and labor shortages in the wake of the COVID-19 pandemic.

Accompanied by Patrick Harker, the President of the Federal Reserve Bank of Philadelphia, Powell visited York, Pennsylvania. The visit aimed to understand how the historically manufacturing-centric city, once the birthplace of York Peppermint Patties, is diversifying its economy.

During their discussions, the business owners were generally hopeful but highlighted various challenges. Labor shortages persist; high-interest rates have dissuaded some from business expansion; and issues like escalating costs and consistent difficulties in supply chain management continue to plague them.

Julie Flinchbaugh Keene, co-owner of Flinchbaugh’s Orchard & Farm Market, remarked that the unpredictability instigated by the pandemic has made it exceedingly difficult to manage a business. Her comments were made as Powell and Harker stopped by the Gather 256 coffee shop on their walking tour. She mentioned that although her family had navigated through periods of high inflation in the 1980s, the dynamics are different now, making past experiences less relevant.

Upon hearing her concerns, Powell assured, “We’ll get inflation down.”

Jennifer Heasley, proprietor of Sweet Mama’s Mambo Sauce, voiced her desire for lower interest rates. Heasley disclosed that elevated rates on her credit cards, which she occasionally uses to finance her business, are a burden.

The visit from the Federal Reserve officials comes at a time when they are closely observing the economic indicators to evaluate the efficacy of their rate-increasing measures in combating inflation. At their last meeting, officials expressed optimism about achieving a “soft landing” for the economy, expecting inflation to taper down to around 2.6% by the end of 2024, with only a modest increase in unemployment rates.

Despite this optimism, the Federal Reserve also indicated an intention to maintain higher benchmark rates into 2024, potentially even increasing them further this year.

While inflation rates have fallen from an alarming 9.1% in June 2022 to 3.7% in August, the unemployment rate has surprisingly remained low, and the economy has shown resilience.

Before embarking on their walking tour, Powell and Harker led a roundtable discussion with local business leaders, nonprofit heads, and educators. Kevin Schreiber, CEO of the York County Economic Alliance, confirmed that the local economy is expanding steadily. However, he also acknowledged that many are apprehensive about the next year and a half, especially concerning the persistence of high-interest rates and unresolved inflation.

Schreiber also brought attention to the decline in local child care centers, down from 219 before the pandemic to just 170 now, citing this as another barrier to full workforce participation, particularly for parents.

Tom Palisin, Executive Director of The Manufacturer’s Association, who also attended the roundtable, later stated that elevated interest rates have resulted in many companies reconsidering or delaying acquisitions and technological investments.

Palisin summed up the sentiment by saying, “Companies want to invest, but they’ve hit the pause button.”

Frequently Asked Questions (FAQs) about Federal Reserve Visit

Who visited York, Pennsylvania to talk to small business owners?

Federal Reserve Chair Jerome Powell, accompanied by Patrick Harker, the President of the Federal Reserve Bank of Philadelphia, visited York, Pennsylvania. They engaged with small business owners to discuss their concerns about the current economic conditions.

What were the main economic issues discussed during the visit?

The main issues discussed included inflation, high-interest rates, and labor shortages. Business owners expressed concerns about these challenges and how they are affecting their operations in the post-pandemic environment.

What was the purpose of Jerome Powell’s visit?

The purpose of the visit was to get a first-hand understanding of the challenges faced by small businesses in the current economic climate. This would assist the Federal Reserve in making more informed decisions about economic policy.

Was there any discussion on the effectiveness of the Federal Reserve’s current policies?

Yes, the visit comes at a time when the Federal Reserve is assessing the impact of its policies, particularly rate hikes, on controlling inflation. Officials have expressed optimism about achieving a “soft landing,” with inflation expected to reduce to around 2.6% by the end of 2024.

What is the sentiment among the small business owners?

Small business owners are generally optimistic but concerned about persistent issues such as labor shortages, high costs, and supply chain difficulties. There is a general feeling of unpredictability that makes operating a business more challenging.

What does the decline in local childcare centers signify?

The decline in local childcare centers, from 219 before the pandemic to 170 now, was cited as a barrier to full workforce participation. It is considered a significant problem for local businesses as it keeps many parents out of the workforce.

How are businesses reacting to high-interest rates?

High-interest rates have led to hesitance among some business owners regarding expansion and investment. They are reconsidering or delaying acquisitions and technological investments due to the cost of borrowing.

Were any specific assurances given by Jerome Powell?

Jerome Powell assured that efforts are being made to get inflation down, although no specific actions or timelines were disclosed during the visit.

Who else took part in the discussions in York?

In addition to small business owners, the discussions also involved nonprofit leaders and educators. Kevin Schreiber, CEO of the York County Economic Alliance, and Tom Palisin, Executive Director of The Manufacturer’s Association, were among the participants.

More about Federal Reserve Visit

  • Federal Reserve’s Official Statement on Current Economic Policies
  • Federal Reserve Bank of Philadelphia
  • Overview of Inflation Rates by the U.S. Bureau of Labor Statistics
  • Labor Shortage Statistics by the U.S. Department of Labor
  • York County Economic Alliance Official Website
  • The Manufacturer’s Association Official Website
  • U.S. Small Business Administration on the Impact of Interest Rates
  • Recent Fed Meeting Minutes on Monetary Policy Objectives

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JohnDoe101 October 3, 2023 - 10:24 am

Wow, finally Powell’s getting out of the Washington bubble. It’s about time he heard what real business owners have to say, not just economists.

MamaSmith October 3, 2023 - 10:54 am

Lack of childcare is a real issue. Keeps a lot of talented ppl outta the workforce.

JaneFinance October 3, 2023 - 1:33 pm

Inflation is just the tip of the iceberg. Labor shortages, high costs… the list goes on. Hope the fed is listening.

InvestorJane October 3, 2023 - 2:59 pm

The market’s gonna react to this visit for sure. All eyes on the Fed’s next move.

PolicyWonk October 3, 2023 - 6:18 pm

Federal Reserve visits like this are important but actions speak louder than words. Let’s see some policy changes.

EconNerd October 3, 2023 - 10:38 pm

The Fed seems optimistic about a “soft landing”, but I’m not so sure. Too many variables at play here.

YorkLocal October 3, 2023 - 10:53 pm

It’s great that Powell and Harker came to York. We’ve got a lot of issues here that need some attn.

TechGuy October 3, 2023 - 11:22 pm

Companies hit the pause button on tech investments coz of high interest rates? Not a good sign for innovation.

SmallBizOwner October 4, 2023 - 1:14 am

interest rates are killing us. Hope Powell actually does something bout it.

WorkingParent October 4, 2023 - 1:44 am

can confirm, childcare is a nightmare right now. Glad it got mentioned.


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