By Crystal Yormick
Boston University News Service
Federal Reserve Bank of Boston President Susan M. Collins presented a “benign” outlook on the economy with inflation and wage growth remaining main focuses as markets begin experiencing long-term effects of continued inflation, tariffs and heightened market uncertainty.
Collins said Wednesday that the Federal Reserve must maintain its federal independence to ensure it can make long term monetary policy decisions to reach and sustain its goals, including a 2% target for inflation it currently exceeds.
“That’s an environment that really supports maximum employment,” Collins said to a gathering of about 200 people, consisting of business leaders across sectors from outsourcing to financing. “Vibrancy enables people to be able to thrive.”
She reported solid economic growth and a resilient consumer consumption, which she attributed to the healthy spending positions of households and firms, and reduced employment growth that reflects a slow growth in both labor supply and labor demand and uncertainty in the current economic environment.
“As the uncertainty fades and firms adjust to the new tariff environment, I would expect the pace of hiring to increase,” Collins said.
While the broader economy has remained “relatively robust,” Collins said she expects the effects from tariffs to become more pronounced as firms pass costs onto consumers in the form of higher prices, which in turn would limit purchasing power and household spending.
Consumers have responded with resilience so far, she said, but added that this could evolve, so it should be watched carefully.
Current market challenges include heightened uncertainty, housing supply and affordability, scarcity of childcare and increased difficulties for maintaining technology, science and healthcare ecosystems, according to Collins.
Collins, who usually roots economic decisions in data, said considering the federal government shutdown – where certain data might now be unavailable until it reopens – the Federal Reserve will use a range of other valuable indicators to make decisions.
“We get creative and look at the range of information out there,” she said in an interview with the Boston Business Journal.
Most Boston business leaders were unsurprised by the findings and presented a range of reactions following the presentations from “cautiously pessimistic” to neutral to optimistic.
Joelle Moroney, vice president of brand partnerships for Captiv8, said she appreciated Collins’ “audacious” goals of financial stability and employment.
“It gave me a good perspective to lean in on these small business owners and bring our part to support those areas wherever we can,” Moroney said.
DJ Dantas, founder and CEO of Solvane Strategies, said he was unsurprised by Collins’ findings and echoed her use of the word benign to describe the economic outlook.
“A lot of it are things that I’ve observed and heard before,” Dantas said. “I was more so expecting some new information, something I haven’t heard before.”
Topics not addressed during the hour-long presentation that business leaders said they would have liked to see included growing wage gaps, a greater focus on healthcare and education and tariffs’ effects outside the United States, including China, which Rob Natale, founder of North Square Capital, described as the “elephant in the room.”This story originally appeared in the Boston Business Journal.
