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The Fed Explained: What Every Business Owner Should Know With Shari Bower · The Confident Entrepreneur With Jennifer Ann Johnson

• 0:36
  Jennifer Johnson: Today, I have the pleasure of speaking with Sherry Bauer, the regional executive at the Miami branch of the Federal Reserve Bank of Atlanta.
• 0:43
  Jennifer Johnson: She's a member of the core group of Atlanta Fed leaders advising on monetary policy and her work with business executives in the branch's 13 county area, helps bring local insights to national policy deliberations.
• 0:57
  Jennifer Johnson: Thank you, Sherry, for being here today.
• 1:00
  Shari Bower: Thank you so much for having me.
• 1:01
  Shari Bower: I'm excited to share with everybody all about the Fed and what we do.
• 1:06
  Jennifer Johnson: Right, because, you know, for small business owners, the Fed is kind of like this mysterious, we don't know what they do, but we know they're important.
• 1:15
  Jennifer Johnson: And I thought, you know, who to get this information from better than you?
• 1:20
  Jennifer Johnson: Because you you live and breed this world.
• 1:24
  Jennifer Johnson: So I want to dive right in.
• 1:26
  Jennifer Johnson: What is the Federal Reserve?
• 1:28
  Jennifer Johnson: And why was it really created to begin with?
• 1:32
  Shari Bower: So pretty simply, the Federal Reserve, or the Fed as we call it, and I will refer to it for short because the Federal Reserve is a mouthful, is really just the central banking system of the United States.
• 1:43
  Shari Bower: So it was established way back in 1913 through something called the Federal Reserve Act.
• 1:48
  Shari Bower: And it was really meant to provide the nation with a safer, more flexible, and more stable monetary and financial system.
• 1:56
  Shari Bower: And it was actually created in response to a series of financial panics, most notably the panic of 1907, which really highlighted that there was a need for a central authority to oversee the nation's monetary system.
• 2:08
  Shari Bower: So I will age myself with this, although I don't think I was like alive when the movie was produced.
• 2:15
  Shari Bower: But I think Bailey Brothers building in loan.
• 2:18
  Shari Bower: So, you know, for those that watch It's a Wonderful Life, I mean, that was basically a bank panic.
• 2:23
  Shari Bower: Everyone was worried running to the bank and tried to pull their money out of the bank.
• 2:27
  Shari Bower: And George Bailey intervened to convince everyone, like, just take what you need and like used his honeymoon fund to give them funds.
• 2:33
  Shari Bower: So essentially, you know, that's what I think of sort of when I think of bank panics.
• 2:37
  Shari Bower: And the Fed was initially created to address those, but now we're charged with several sort of more broader responsibilities than that.
• 2:45
  Jennifer Johnson: So is this civil, and and I'm going off the topic here, but when we see FDIC, is that the same thing or no?
• 2:52
  Jennifer Johnson: That's different.
• 2:53
  Shari Bower: It's not the same thing.
• 2:54
  Shari Bower: They have very specific responsibilities, but yes, the FDIC is in place to provide an insurance if you vote for your deposit.
• 3:00
  Shari Bower: So a similar similar idea where have um uh different responsibilities than the FDIC, but yes.
• 3:07
  Jennifer Johnson: Got it.
• 3:07
  Jennifer Johnson: So it was kind of like the answer to we needed an organization around to stop this craziness or people being panicked kind of thing.
• 3:20
  Shari Bower: Um that was providing you know safety and soundness, regulation, uh, all sorts of things.
• 3:25
  Shari Bower: But yeah, essentially to give the public confidence in their banks.
• 3:28
  Shari Bower: And if something did happen, that there was an authority that was overseeing the banks and that would step in and protect them.
• 3:34
  Jennifer Johnson: So, what are the modern day activities of what the I'll call it the Fed, what the Fed does today.
• 3:42
  Shari Bower: Yes.
• 3:42
  Shari Bower: I have to be careful.
• 3:43
  Shari Bower: Sometimes I people ask where I work, and I'm like, I work at the Fed, and I don't want them to think like I'm a Fed, like the Feds.
• 3:49
  Shari Bower: Right, exactly.
• 3:50
  Shari Bower: Because that's that's what we're thinking, but I guess the Federal Reserve.
• 3:54
  Shari Bower: Yes, I do wear a dark suit often, but not that good, not that kind of Fed.
• 3:59
  Shari Bower: So yeah, so we perform really five key functions.
• 4:01
  Shari Bower: So the one I'm gonna talk most about today is conducting our nation's monetary policy.
• 4:06
  Shari Bower: We also promote financial system stability.
• 4:09
  Shari Bower: So a lot of that is just around monitoring and analysis.
• 4:13
  Shari Bower: We supervise and regulate financial institutions, so those are the banks.
• 4:17
  Shari Bower: Um and we work closely with some.
• 4:19
  Shari Bower: There are a few agencies that do that.
• 4:21
  Shari Bower: So you like you mentioned the FDIC, we work closely with them, with our state banking regulators, and also with the OCC, who's the Office of the Controller of the Currency, that also does um supervision for financial institutions.
• 4:32
  Shari Bower: Then we also foster payment and settlement system safety and efficiency.
• 4:37
  Shari Bower: And this one I feel like not as many people know about, and it's kind of interesting.
• 4:40
  Shari Bower: So we circulate currency and coin for our banking institutions.
• 4:45
  Shari Bower: We actually process and clear checks.
• 4:47
  Shari Bower: Um, and that's something that the Atlanta Fed does for the whole system now.
• 4:50
  Shari Bower: And yes, people are still writing checks.
• 4:51
  Shari Bower: I mean, it has the volume of check processing has declined significantly, but there are still people that use checks, and so we process those.
• 5:00
  Jennifer Johnson: So they go through all one place?
• 5:02
  Shari Bower: They do.
• 5:02
  Shari Bower: There are other private sector um like offerings that clear checks as well, but the Fed also provides that service.
• 5:08
  Shari Bower: Wow.
• 5:08
  Shari Bower: Uh, we also run something called the ACH or the automated clearinghouse system, and so that processes small value electronic uh credit and debit transactions.
• 5:17
  Shari Bower: So, like yourself and other small businesses might use that um for paychecks, uh, social security, right?
• 5:23
  Shari Bower: Things like that.
• 5:25
  Jennifer Johnson: So it gets cleared through through the Federal Reserve.
• 5:28
  Shari Bower: Yes.
• 5:28
  Shari Bower: And there is also a private sector uh business that does that as well, but the Fed also provides it.
• 5:34
  Shari Bower: Um and then we also process wholesale payments through our system called Fedwire, which is more large value financial transactions among banks, businesses, and individuals.
• 5:43
  Jennifer Johnson: Um that it would is that you okay, so that's between banks and other banks as well as bigger businesses.
• 5:50
  Shari Bower: Exactly.
• 5:50
  Shari Bower: And those are larger volume transactions than what we would typically process through ECH.
• 5:54
  Shari Bower: And then we also promote consumer protection and community development, and we do that through research, analysis, and data protection.
• 6:01
  Shari Bower: And I actually should add to payments because this is a little bit newer, but we also offer a real-time payment system now called FedY, uh FedNab.
• 6:08
  Shari Bower: And what is that?
• 6:10
  Shari Bower: Um it's another payment system, but it actually operates um 24-7 so that you can actually process payments real time.
• 6:17
  Jennifer Johnson: Oh wow.
• 6:18
  Jennifer Johnson: Yeah.
• 6:18
  Jennifer Johnson: So this is a lot.
• 6:22
  Shari Bower: Yeah.
• 6:23
  Jennifer Johnson: That that you guys do that uh, you know, the regular public would not have any idea that the Federal Reserve, because all we see is the day the Federal Reserve German gets on the TV and talks, right?
• 6:36
  Jennifer Johnson: That's what we see as consumers.
• 6:38
  Shari Bower: Yes.
• 6:38
  Shari Bower: Or when a large financial institution runs into trouble, we might do something about that in the news as well.
• 6:44
  Shari Bower: Yeah.
• 6:44
  Jennifer Johnson: Mm-hmm.
• 6:45
  Jennifer Johnson: Exactly.
• 6:46
  Jennifer Johnson: So I guess you probably answered how it's structured within that.
• 6:53
  Shari Bower: I did not.
• 6:53
  Shari Bower: No.
• 6:54
  Shari Bower: It's actually a it's an interesting and somewhat more complicated structure than I think people realize.
• 7:00
  Shari Bower: So the Fed was actually structured to balance central control with regional representation.
• 7:06
  Shari Bower: And I'm not gonna go into like the history of the Fed.
• 7:08
  Shari Bower: There's lots of books, and it's actually pretty interesting about the back and forth about how they decided to create the central bank the way that um you know we did and why.
• 7:17
  Shari Bower: But essentially, we are a central bank under uh public control, but with many checks and balances.
• 7:23
  Shari Bower: And so Congress actually oversees the entire Federal Reserve System.
• 7:27
  Shari Bower: Uh, and we have to work within the objectives established by Congress.
• 7:31
  Shari Bower: So they also gave the Fed authority to um autonomous autonomously carry out its responsibilities without political pressure, and that independence really allows the Fed to focus on our longer-term economic goals, such as controlling inflation and promoting sustainable growth and full employment, which I'll talk about a little bit more uh later on, but that's really to focus on the overall health of the economy.
• 7:55
  Shari Bower: And so the Fed actually has three parts.
• 7:57
  Shari Bower: We have the Board of Governors in Washington, D.C., we have the regional reserve banks, there's 12 of them, and then we have the Open Federal Open Markets Committee or FOMC.
• 8:05
  Shari Bower: And so they kind of operate independently of the federal government to carry out our responsibilities.
• 8:11
  Shari Bower: And so we're kind of this interesting blend of public and private and centralized and decentralized.
• 8:18
  Shari Bower: And so I will break this down a little bit more for you about each of those sort of pieces of the Fed, what we what they do.
• 8:24
  Shari Bower: So, as I said, we've got the Board of Governors in Washington, DC.
• 8:28
  Shari Bower: Uh, we've got seven members on the board of governors.
• 8:30
  Shari Bower: They're appointed by the president, uh, but they're actually confirmed by the Senate, and they serve staggered 14-year terms.
• 8:37
  Shari Bower: And that board of governors actually oversees the entire Federal Reserve System.
• 8:41
  Shari Bower: And those are the 12 reserve banks and their 24 branches, and they are really the operating arms of the Fed.
• 8:48
  Shari Bower: So each of those reserve banks kind of operates with own within its own particular geographic area or district of the country.
• 8:54
  Shari Bower: So I work for the Atlanta Fed, or the sixth district as we call it, and we cover most of the southeast portion of the country, and we actually have branch offices in Miami, Jacksonville, Birmingham, Nashville, and New Orleans, plus our head office in Atlanta.
• 9:09
  Shari Bower: And each of those 12 reserve banks that I mentioned is independently operated with its own president and its own board of directors, and they do different things.
• 9:18
  Shari Bower: Uh, but what we have in common is that we are conducting research on the economy, we are supervising the banks that are in our district, and we are providing financial services to those banks and to the US government.
• 11:55
  Shari Bower: Um, a fun fact, I mentioned that one of the things that the Fed does is circulate currency.
• 12:00
  Shari Bower: And so we actually place that currency that you use to make purchases into circulation.
• 12:05
  Shari Bower: So if you look at your bills, each bill actually has a number and a letter on it that denote the Federal Reserve Bank that accounts for that.
• 12:13
  Shari Bower: So, for example, if you look at you know a $5 bill and you see um six, it'll have the letter F next to it because F is the sixth letter in the alphabet.
• 12:23
  Shari Bower: And that means it appears on the balance sheet for the Federal Reserve Bank of Atlanta, and we are the sixth district.
• 12:30
  Jennifer Johnson: That is fascinating.
• 12:32
  Jennifer Johnson: I, you know, I think throughout all of this that most people don't know that it's a public-private entity, first and foremost.
• 12:42
  Jennifer Johnson: And I find it interesting that it was set up so that you have, I don't remember how many branches you said, but each branch branch has its own board of directors and its own, did you call it president or so each so we've got those called reserve banks, and each of those reserve banks has a president and its own board of directors, and then our branches actually also have boards of directors.
• 13:03
  Shari Bower: So, like in Atlanta, the president of the Atlanta Fed is Raphael Bastik.
• 13:07
  Shari Bower: Uh Atlanta has a board of directors, and then Miami has a board of directors, Jacksonville has a board of directors, Nashville.
• 13:15
  Jennifer Johnson: Interesting.
• 13:15
  Shari Bower: Yeah.
• 13:15
  Jennifer Johnson: Um it's just a different setup.
• 13:18
  Shari Bower: Yeah, and what I um the last arm is also the Federal Open Markets Committee.
• 13:23
  Shari Bower: So that's actually a combination.
• 13:24
  Shari Bower: So the FOMC is made up of those seven governors that I mentioned that are in DC, and uh the 12 reserve banks, the 12 reserve bank presidents.
• 13:34
  Shari Bower: Five of those 12 are voting members on the FOMC, and that rotates.
• 13:38
  Shari Bower: And then the New York Fed president has a permanent seat on the FOMC.
• 13:42
  Shari Bower: Um, and so they meet regularly about eight times a year to discuss economic conditions and to set monetary policy.
• 13:49
  Jennifer Johnson: And I'm assuming the New York president, that was just kind of set from the beginning where they have the permanent.
• 13:56
  Jennifer Johnson: So like stock, are we talking stock market?
• 14:03
  Jennifer Johnson: Is that what that is?
• 14:05
  Shari Bower: But they buy and sell treasuries for the Fed.
• 14:07
  Shari Bower: And so they have they have, you know, sort of one additional responsibility that some of the other reserve banks don't have.
• 14:12
  Shari Bower: Um and you know, also because of their location on Wall Street.
• 14:16
  Shari Bower: And um, yeah, so they run the bank's um securities and open market operations portfolio and have a permanent permanent vote.
• 14:23
  Shari Bower: All of the reserve bank presidents are members of the FOMC, but only six of them get to vote.
• 14:30
  Shari Bower: And so five of them rotate, and as I said, the New York Fed has that permanent seat.
• 14:35
  Jennifer Johnson: And explain for our listeners what FOMC is.
• 14:38
  Shari Bower: So the FOMC is the Federal Open Markets Committee.
• 14:41
  Shari Bower: Um, and those are the policymakers that will set um interest rates, which I will talk about when we get to monetary policy in a little bit more detail.
• 14:51
  Jennifer Johnson: Wonderful.
• 14:51
  Jennifer Johnson: This is so intriguing because there's so many things that go into this that, you know, again, most people don't understand.
• 14:59
  Jennifer Johnson: How does monetary policy actually work?
• 15:03
  Jennifer Johnson: And what goes into the Fed's decision when when they're making um when they're making the process?
• 15:10
  Shari Bower: Yeah, so we have this dual mandate, uh, which I'm sure a lot of people hear about in the news and when our chairman is talking um post the FOMC meetings, and it's around um maximum employment and price stability.
• 15:24
  Shari Bower: So price stability is really around inflation, and we want to see inflation remain low and stable over time, because when inflation is low and stable, people can hold money without having to worry that high inflation will erode its purchasing power.
• 15:37
  Shari Bower: So, for example, people may hear in the news about the Fed's 2% inflation target.
• 15:43
  Shari Bower: And so 2% inflation basically means that on average, a dollar buys 2% fewer goods and services than it did the year before, which seems somewhat manageable.
• 15:54
  Shari Bower: But if it was over 7%, uh, you know, which is where we were after the pandemic or in the midst of the pandemic, um, you know, that's much higher than our 2% target.
• 16:07
  Shari Bower: And so with stable prices, you really don't have to worry about prices going up and down significantly when making plans, um, or when you're a business when borrowing or lending for long periods, right?
• 16:17
  Shari Bower: And so that's that sort of stable prices piece of what we do.
• 16:22
  Shari Bower: And then the other component of the mandate is around maximum employment, which we really think about as the highest level of employment that the economy can sustain over time.
• 16:31
  Shari Bower: So measuring that is a little bit different because we don't have an exact target right now, the way that we do for inflation.
• 16:38
  Shari Bower: And things, you know, that business conditions vary over time, right?
• 16:41
  Shari Bower: Demographics, you know, labor market regulations, immigration, there are other factors that impact uh the labor market.
• 16:48
  Shari Bower: So we really consider a wide, a wide range of employment indicators, whether it's hiring, unemployment, or looking at turnover data data when we're thinking about uh the employment mandate.
• 16:59
  Shari Bower: And so the Fed sets their monetary policy to influence short-term interest rates and the overall financial conditions to really help achieve that dual mandate around maximum employment and stable prices.
• 17:11
  Shari Bower: And so we do that through something called the federal funds rate.
• 17:14
  Shari Bower: And that's the Fed's policy rate, and it's an interest rate specifically for overnight borrowing by banks.
• 17:20
  Shari Bower: So the FOMC sets that target rate for the Fed funds rate, and we do it within these upper and lower limits.
• 17:26
  Shari Bower: So you will hear, you know, the Fed uh cut or raised by in these 25 basis point increments.
• 17:33
  Shari Bower: And so when necessary, we change the stance of monetary policy by raising or lowering that target range for the Fed funds rate, which again is a short-term rate.
• 17:44
  Shari Bower: Um now, in theory, other rates kind of normally would follow that, you know, so there are longer-term rates, but that Fed funds rate is really about short-term borrowing.
• 17:54
  Shari Bower: And so if we lower that target range, that really represents what we would refer to as an easing of monetary policy, because it's accompanied by lower short-term interest rates in financial markets and sort of loosening of broader financial conditions.
• 18:08
  Shari Bower: And so we would typically do that if the economy was a little slow or if inflation was too low.
• 18:14
  Shari Bower: And then conversely, we would raise that target range if we would call that tightening of monetary policy.
• 18:21
  Shari Bower: And so we would raise rates uh if the economy was kind of overheating or if inflation was too high.
• 18:26
  Shari Bower: And like I said, normally that affects changes in other interest rates and in financial conditions more broadly, which in turn should affect spending decisions by households, by businesses, and that sort of has broader implications for activity, employment, and inflation.
• 18:42
  Jennifer Johnson: You do you mentioned something that drew my attention that I'm sure people I don't know what this means.
• 18:48
  Jennifer Johnson: So I'm sure other people won't either.
• 18:50
  Jennifer Johnson: You mentioned something about overnight borrowing from banks.
• 18:54
  Shari Bower: Is that so banks will borrow from each other overnight and they charge each other to borrow?
• 18:59
  Jennifer Johnson: Oh, interesting.
• 18:59
  Jennifer Johnson: To cover whatever they had from the day before kind of thing.
• 19:02
  Shari Bower: Exactly.
• 19:02
  Shari Bower: Yeah.
• 19:02
  Shari Bower: And so they charge they they charge each other a certain rate.
• 19:05
  Shari Bower: And so that Fed funds rate that we're targeting is to target that rate for overnight borrowing.
• 19:11
  Shari Bower: So either making it more expensive for them to borrow from each other or less expensive, which in turn impacts what they charge consumers and businesses to borrow from them.
• 19:20
  Jennifer Johnson: Got it.
• 19:21
  Jennifer Johnson: That makes sense.
• 19:22
  Shari Bower: Yeah.
• 19:23
  Jennifer Johnson: So I'm curious, Sherry, with your position that you have at the at the Federal Reserve, where do you fit in with all of this?
• 19:31
  Jennifer Johnson: Where does your position lie?
• 19:35
  Shari Bower: So a lot actually goes into that monetary policy process, right?
• 19:40
  Shari Bower: So the Fed uses kind of this comprehensive approach to data collection and analysis to make their policy decisions.
• 19:46
  Shari Bower: So they monitor a wide range of economic indicators, surveys, financial market data, international conditions.
• 19:53
  Shari Bower: They've got teams of economists and analysts sort of gathering and analyzing the data.
• 19:58
  Shari Bower: And before each FOMC meeting, um, we have researchers look at sort of key surveys, and they kind of interpret all of this information.
• 20:07
  Shari Bower: So we've got the data connection collection, we've got the analysis, we have discussion, and then there's that policy decision.
• 20:14
  Shari Bower: And so, and then there's communication, right?
• 20:17
  Shari Bower: So after each meeting, now the chairman and the chairperson of the Fed provides a statement and has a press conference and answers questions.
• 20:24
  Shari Bower: And then even in between meetings, you will see the Federal Reserve presidents and the various governors making speeches about all kinds of things related to the Fed, monetary policy, regulation, you know, artificial intelligence, all sorts of things.
• 20:37
  Shari Bower: So my role at the Fed is I am the regional executive uh based in Miami for the Federal Reserve Bank of Atlanta.
• 20:45
  Shari Bower: So I'm part of our research division.
• 20:47
  Shari Bower: And we have a regional executive at each of those other branches that I mentioned across the Southeast.
• 20:52
  Shari Bower: And essentially they created our team back during the 2008 financial crisis because our president at the time and our head of uh research identified that there was really a need to complement the economic data that they were getting with sort of more real-time holistic information from businesses.
• 21:09
  Shari Bower: And so they created this team whose sole responsibility was to have boots on the ground in the communities that we're serving, talking to business leaders about economic conditions and what they're doing.
• 21:20
  Shari Bower: And it really helps us to paint a broader picture than we can with sort of your typical data and statistics alone.
• 21:27
  Shari Bower: And it also helps us identify trends.
• 21:29
  Shari Bower: So a lot of times we are hearing things from businesses well before you will see it in the data.
• 21:34
  Shari Bower: So the data is often very backward looking, monetary policy is forward-looking.
• 21:38
  Shari Bower: I've heard you know, some of our economists talk about it as like trying to drive a car by only looking in the rearview mirror.
• 21:43
  Shari Bower: Um, that's really difficult.
• 21:45
  Shari Bower: And you can imagine in times of crises, getting information from businesses about you know, are you hiring?
• 21:51
  Shari Bower: How are um borrowing costs impacting your capex and investment decisions?
• 21:55
  Shari Bower: What are you seeing with prices?
• 21:57
  Shari Bower: Or are you seeing cost increases and are you planning to pass those through to customers?
• 22:02
  Shari Bower: Are you planning layoffs?
• 22:03
  Shari Bower: Really important information that really, again, helps us identify trends oftentimes before we see it in the data.
• 22:09
  Shari Bower: And what I love about what I do is that this is not just a check the box for us.
• 22:15
  Shari Bower: Uh, you know, this we have a direct line to our president.
• 22:18
  Shari Bower: He really values the information, our economists value the information, and we brief him together with the economist so he really gets a sense of here's what we're seeing in the data, here's what we're hearing from the businesses.
• 22:29
  Shari Bower: The questions that we're asking our business contacts are informed by what our economists are talking about, what they're interested in, what they're seeing.
• 22:36
  Shari Bower: And so it's a really nice sort of symbiotic relationship, and it really does provide a really good real-time holistic picture of what's happening in the economy.
• 22:44
  Shari Bower: And uh it's really valuable.
• 22:46
  Jennifer Johnson: I would say it would be because you're really getting to talk to the people who are affected by it immediately in real time, so you know what to report back.
• 22:56
  Jennifer Johnson: And it's not just numbers, it's not just a set of data that you don't have a face to or an emotion to, right?
• 23:04
  Jennifer Johnson: It's you're giving them information that's valuable.
• 23:07
  Jennifer Johnson: I think that's wonderful.
• 23:08
  Shari Bower: Yeah.
• 23:08
  Shari Bower: You know, you mentioned Go ahead.
• 23:10
  Shari Bower: No, I was gonna say we really try and talk to a range of businesses.
• 23:14
  Shari Bower: So we obviously touch all the large employers based in the Southeast, but we also talk to small and mid-sized businesses, and we try to cover a range of industries, whether it's retail, manufacturing, you know, financial, health, nonprofits, uh, you know, you name it, anyone that's sort of willing to sit down and chat with us about what they're seeing and what they're doing is is helpful, and we appreciate the insights and the expertise.
• 23:36
  Jennifer Johnson: It's great because you're doing across all sectors.
• 23:38
  Jennifer Johnson: It's not just siloed into one particular segment of the economy.
• 23:42
  Jennifer Johnson: So you had mentioned something about, you know, in in times of economic crisis.
• 23:47
  Jennifer Johnson: I'm curious, how does the Federal Reserve spawn respond during times of economic crises and what resources does it actually offer to small businesses?
• 23:57
  Jennifer Johnson: Because I'm sure many of the small businesses that are listening are like, okay, this is great, but you know, how how do they help us?
• 24:05
  Shari Bower: Yeah.
• 24:05
  Shari Bower: So as I mentioned earlier, the Fed may cut interest rates to make borrowing cheaper and encouraging, encourage spending and investment.
• 24:13
  Shari Bower: They also may engage in something called QE or quantitative easing, which really is about increasing the money supply and stimulating economic activity that way.
• 24:22
  Shari Bower: It's just another tool we sort of have in our back pockets, if you will, where we buy and sell treasuries and securities in order to inject more liquidity into the financial system.
• 24:31
  Shari Bower: And that also helps sort of push down longer-term borrowing rates.
• 24:35
  Shari Bower: Okay.
• 24:36
  Shari Bower: And then banks, so our member banks, can borrow directly from the Fed when the markets are stressed so that they are able to keep lending to businesses.
• 24:45
  Shari Bower: And then in times of crises, we can also establish special lending facilities to ensure that credit continues to flow to businesses and households.
• 24:54
  Shari Bower: So, for example, during the COVID 19 pandemic, the Fed created some programs to support small and medium businesses through loans and other financial assistance.
• 25:02
  Shari Bower: And then I would say we also use our communications to sort of reassure public the public and businesses, kind of just helping to maintain confidence in the financial system.
• 25:11
  Shari Bower: So we communicate policy actions to the public.
• 25:13
  Shari Bower: We talked about, you know, the FOMC press releases, statements, and uh the reserve bank presidents and governors making speeches in between those meetings.
• 25:22
  Shari Bower: And so essentially our role is really to keep credit flowing, to stabilize the markets, uh, and to restore confidence.
• 25:28
  Shari Bower: Now, in terms of resources for small businesses, we typically don't lend directly to small businesses, but we do have a lot of great resources for them.
• 25:36
  Shari Bower: So I was I was looking at this data before we started chatting.
• 25:42
  Shari Bower: And so in Florida alone, there were three and a half million small businesses last year that represent 99.8% of all Florida businesses.
• 25:50
  Shari Bower: So that's businesses with 500 employees and less.
• 25:53
  Shari Bower: Yeah.
• 25:54
  Shari Bower: Talk about backbone.
• 25:56
  Shari Bower: Yeah.
• 25:57
  Shari Bower: And they employ about 3.8 million people or 40% of Florida's workforce.
• 26:01
  Shari Bower: Wow.
• 26:02
  Shari Bower: Yeah.
• 26:02
  Shari Bower: So not small peanuts, right?
• 26:04
  Shari Bower: Uh a vital part of the American economy, um, and really providing a driving force for job creation, which is really important.
• 26:10
  Shari Bower: So the Atlanta Fed actually has a strategic priority on economic mobil mobility and resilience.
• 26:17
  Shari Bower: Really, so really understanding small business conditions, you know, and performance remain a really important part of our community and economic development team's work.
• 26:26
  Shari Bower: And you can find some of their research on our website.
• 26:29
  Shari Bower: Like they did a partner update during COVID about how small businesses were faring.
• 26:33
  Shari Bower: And we also, the Federal Reserve also runs the Small Business Credit Survey or SBCS.
• 26:39
  Shari Bower: That's a national sample of small businesses for firms with fewer than 500 employees.
• 26:43
  Shari Bower: And the aim is to just provide insights into firms' needs and experiences with financing and debt.
• 26:49
  Shari Bower: And the results of that get published every year.
• 26:52
  Shari Bower: So you can anyone take that?
• 26:54
  Jennifer Johnson: Can anyone do that?
• 26:55
  Shari Bower: Anyone can participate in the survey, yeah, if you have 500 employees or less.
• 27:00
  Shari Bower: And the Atlanta Fed will actually take the results of that survey and publishes information specific to the Southeast.
• 27:06
  Shari Bower: So they'll do profiles on certain states and certain counties.
• 27:10
  Shari Bower: So we share and summarize summarize the results uh on the website.
• 27:14
  Shari Bower: And so you can go on our uh the Atlanta Fed website and find past years reports that sort of offer a view into small business conditions in many southeastern areas.
• 27:24
  Jennifer Johnson: Nice.
• 27:25
  Shari Bower: Yep.
• 27:27
  Jennifer Johnson: So we'll probably be able to publish that link in the show notes so that people can actually go in and take that.
• 27:35
  Jennifer Johnson: So with all of this information, it's it's a lot.
• 27:39
  Jennifer Johnson: And small business owners are probably like, well, how do I know what's actually happening there?
• 27:45
  Jennifer Johnson: How as small business owners can we keep ourselves informed as to what's happening at the Federal Reserve?
• 27:51
  Shari Bower: Yeah.
• 27:51
  Shari Bower: So I'm just gonna I'll try and it it was a lot.
• 27:55
  Shari Bower: My head's spinning and I and I do know this stuff.
• 27:59
  Shari Bower: Yeah, it no, it's a lot.
• 28:01
  Shari Bower: Uh so it's our Federal Reserve 101.
• 28:04
  Jennifer Johnson: That's what it is.
• 28:05
  Shari Bower: And we have we have a team, so we have a team that does um in our public affairs, we have folks that do economic education, and they are out there, you know, specifically talking uh primarily with educators.
• 28:14
  Shari Bower: So it's kind of educate the educators just about the Fed and what we do.
• 28:18
  Shari Bower: So lots of resources wherever you are in any Federal Reserve Bank or the Board of Governors website.
• 28:24
  Shari Bower: So if you want to read more and it's easier to read than just listen to me ramble on, and there's lots of information out there about what we do.
• 28:31
  Shari Bower: But essentially, you know, what I really want to get across is just that our monetary policy decisions are really important for small businesses and they do have direct and indirect impacts, right?
• 28:41
  Shari Bower: So, like I talked about lowering interest rates, it makes interest rates, it makes it cheaper for businesses to borrow money, which encourages investment, you know, in new equipment, expansion hiring.
• 28:51
  Shari Bower: And so, you know, those are things that are really important.
• 28:54
  Shari Bower: And so I think staying informed about what we do is also important.
• 28:58
  Shari Bower: So lots of things that a small business can do.
• 29:01
  Shari Bower: You can follow Fed announcements.
• 29:03
  Shari Bower: Uh, so again, we regularly regularly release statements following the Federal Open Markets Committee meetings.
• 29:09
  Shari Bower: Those meetings are the dates of those meetings are publicly available on the Federal Reserve Board of Governors website.
• 29:15
  Shari Bower: And you can watch the FOMC press conferences, you can hear Powell give a speech, and then you can hear QA with the reporters, which I actually find even more interesting.
• 29:23
  Shari Bower: Uh once a quarter, the Board of Governors also produces something called the DOT plot or the summary of economic projections.
• 29:31
  Shari Bower: And that is also publicly available on the Board of Governors website.
• 29:35
  Shari Bower: And those are sort of, those are not decisions, those are kind of point-in-time projections, and it's called the dot plot because the FOMC members do it across a range of economic indicators.
• 29:45
  Shari Bower: So they do it for economic growth through GDP, they do it for inflation, um, for unemployment, for the Fed funds rate.
• 29:53
  Shari Bower: And each dot actually represents an FOMC member, which is why it's called the dot plot.
• 29:57
  Shari Bower: Um, it doesn't tell you who voted where, sure, but you can see across, again, a range of indicators what their sort of forward-looking thinking is, at least at that point in time.
• 30:07
  Shari Bower: So that's once a quarter and that's publicly available on their website.
• 30:10
  Shari Bower: Before every FOMC meeting, we published something called the Beige Book.
• 30:15
  Shari Bower: And that is actually more of a higher level anecdotal summary of economic conditions across the entire country.
• 30:22
  Shari Bower: So that is probably a little bit more easily digestible for a non-economist or you know, your sort of every everyday person.
• 30:31
  Shari Bower: Right.
• 30:31
  Shari Bower: And that's like I said, that comes out before every FOMC meeting, so eight times a year.
• 30:36
  Shari Bower: And then uh the Atlanta Fed actually has a lot of information up on our website.
• 30:42
  Shari Bower: And we have something called Economy Now.
• 30:44
  Shari Bower: It's an app that you can download on your phone and it tracks all the economic indicators that we look at.
• 30:48
  Shari Bower: So uh again, economic growth through um gross domestic product, inflation, unemployment.
• 30:53
  Shari Bower: Um, we have a wage growth tracker, so you can download that app and look at our pillows.
• 30:57
  Shari Bower: Uh, and all of the Federal Reserve Banks, again, have a wealth of information on their websites that people can look at.
• 31:03
  Shari Bower: And I would say just economic reports and podcasts, like following financial news.
• 31:07
  Shari Bower: There's lots of great podcasts out there about what's going on in the economy that are, you know, also share sort of timely information.
• 31:15
  Shari Bower: And so all of those are great resources.
• 31:17
  Jennifer Johnson: So that is actually leading your podcast uh conversation here, is leading me into the final area of our podcast called the Final Four.
• 31:27
  Jennifer Johnson: And I know we were talking earlier, and I'm like, well, what podcast do you listen to?
• 31:31
  Jennifer Johnson: Um, so are you ready for the final four?
• 31:34
  Shari Bower: It's I'm ready for the final four.
• 31:36
  Shari Bower: And this is a great point for what I should have done at the beginning of this, which is the disclaimer that I was supposed to give.
• 31:43
  Shari Bower: That all and any views expressed today are my own.
• 31:46
  Shari Bower: They are not those of anyone else in the Federal Reserve System or the Federal Reserve Bank of Atlanta.
• 31:50
  Shari Bower: Um, the only person that can speak on behalf of the Fed is the chairman.
• 31:54
  Shari Bower: And so these are Sherry's views and only Sherry's views.
• 31:57
  Shari Bower: All right, Sherry, it's your views.
• 31:59
  Jennifer Johnson: We got it.
• 32:00
  Shari Bower: Woohoo! And also not getting endorsed for any of my favorite books or podcasts or people or anything else.
• 32:08
  Jennifer Johnson: You covered your tracks.
• 32:09
  Jennifer Johnson: That's that's awesome.
• 32:11
  Shari Bower: Thank you.
• 32:11
  Jennifer Johnson: So I these are four questions that I ask every guest that's on my podcast.
• 32:16
  Jennifer Johnson: And I've never had the same answer from anyone.
• 32:19
  Jennifer Johnson: So, what's your favorite book or podcast?
• 32:23
  Jennifer Johnson: And what made it stick with you?
• 32:26
  Shari Bower: Okay, so I I struggled with favorite book because here's what I do is I have like nonfiction that I feel like are important to read, either about like, you know, childcare or like economics that I have every intention of reading and I keep on my bed and I start reading.
• 32:45
  Shari Bower: But then sometimes when I go to sleep, I just want to unwind and not have to think.
• 32:49
  Shari Bower: So I end up reading a lot of um fiction that you know is more to just escape.
• 32:57
  Shari Bower: And so, you know, not necessarily books that I would say that you would like or that I would recommend.
• 33:03
  Shari Bower: So I'm not gonna go there.
• 33:05
  Shari Bower: And instead, I'll go some of the podcasts that I listen to that I just like to stay informed.
• 33:09
  Shari Bower: And so there's a few that I find really interesting.
• 33:11
  Shari Bower: So Planet Money and the Indicator are great podcasts on NPR that sort of give you kind of like bite-sized information about what's happening in the economy that I think again are really sort of easy listening that you can do uh, you know, on a car ride.
• 33:28
  Jennifer Johnson: Well, that's perfect.
• 33:29
  Jennifer Johnson: Those are two good ones.
• 33:30
  Jennifer Johnson: I wrote those down.
• 33:31
  Jennifer Johnson: Do you have a favorite quote or piece of advice that you find yourself coming back to time and time again?
• 33:37
  Shari Bower: So yeah, I would say my favorite piece of advice is just to one, do the things that scare you, which I really try to do.
• 33:46
  Shari Bower: I have a lot of anxiety, but I wouldn't be where I was if I sort of didn't push myself outside of my comfort zone.
• 33:53
  Shari Bower: Uh and even for this job, I was like, oh, I'm never gonna get it.
• 33:57
  Shari Bower: But I said to myself, you know what, just throw your name in the hat.
• 34:00
  Shari Bower: Like, you know, express your interest, do the best you can.
• 34:02
  Shari Bower: And if you get it, great.
• 34:03
  Shari Bower: And if not, and if I had never pushed myself to try that, I wouldn't be where I am.
• 34:07
  Shari Bower: And you know, the other piece I would just say is I hear a lot of women talking about like, you know, being supporters and you know, speaking, you know, helping support other women.
• 34:15
  Shari Bower: And I would say, go beyond that.
• 34:17
  Shari Bower: Don't just be a supporter, sort of be a brag buddy.
• 34:20
  Shari Bower: So talk for those women, you know, when they can't be in the room themselves, be there bragging about them and talking about them.
• 34:27
  Shari Bower: For me, I think that's really important.
• 34:28
  Shari Bower: And again, I wouldn't be where I am if I didn't have the support of a lot of great women in my life who sort of stood up for me when I wasn't in the room and spoke on my back.
• 34:37
  Jennifer Johnson: That's really great advice.
• 34:38
  Jennifer Johnson: And going back to your first one, do it scared, right?
• 34:41
  Jennifer Johnson: Just do the thing.
• 34:44
  Jennifer Johnson: What is one habit or practice that's changed your life?
• 34:49
  Shari Bower: I would probably say doing yoga.
• 34:51
  Shari Bower: I try and make sure that I do yoga once a week if I can, on the weekends.
• 34:58
  Shari Bower: I squeeze it in in the morning, and I just find it really grounding.
• 35:02
  Shari Bower: And when you sort of have a stressful job and have all your family responsibilities, I just find that it's really important to take that time for yourself and to just really try and find some zen wherever you can.
• 35:16
  Jennifer Johnson: Self-care.
• 35:17
  Shari Bower: Yes, self-care.
• 35:18
  Jennifer Johnson: Self-care.
• 35:18
  Jennifer Johnson: And then finally, if you could have dinner with anyone, who would it be and why would you choose them?
• 35:25
  Shari Bower: So this was a really hard one, and there's probably a hundred different people that I could pick.
• 35:30
  Shari Bower: Uh, but the first person that popped into my mind was Stevie Nix.
• 35:34
  Shari Bower: Oh.
• 35:35
  Shari Bower: Because I'm hoping that she's listening to your podcast and will invite me to dinner.
• 35:39
  Shari Bower: She's actually coming to the Hard Rock for a concert.
• 35:43
  Shari Bower: And so, Stevie, if you're listening, um the tickets were really expensive, so I haven't bought them yet, but I'm happy to I'm happy to have dinner with you while you're here.
• 35:53
  Shari Bower: But she's just so cool and like has really just had such an amazing career, and I would just love to sit down with her and hear about it and maybe just have a private concert and have her sing to me while we're dining.
• 36:08
  Jennifer Johnson: She's definitely stood the test of time.
• 36:10
  Shari Bower: Right.
• 36:11
  Jennifer Johnson: And you know, it it's just it's timeless music.
• 36:13
  Jennifer Johnson: She's wonderful.
• 36:14
  Jennifer Johnson: Yeah.
• 36:15
  Jennifer Johnson: Oh my goodness.
• 36:16
  Jennifer Johnson: Sherry, I have thoroughly enjoyed our time together today.
• 36:19
  Jennifer Johnson: You have given us so information on the so much information on the Federal Reserve that I am sure a lot of our listeners are hearing this for the first time.
• 36:27
  Jennifer Johnson: So I appreciate that very much.
• 36:29
  Jennifer Johnson: If our listeners would like to get in touch with you, how can they do so?
• 36:34
  Shari Bower: Yeah, so I will put a link, an email, and a link to our website in the notes from the podcast so that there is a direct connection.
• 36:46
  Shari Bower: And like I said, if you're a business owner and you wanna, you're in South Florida or in in across the Southeast and you want to sit down and chat with me or my colleagues and share some of your business insights, we would welcome that.
• 36:59
  Shari Bower: And again, appreciate insight, your insights and expertise.
• 37:02
  Shari Bower: And I really appreciate you inviting me to be on your podcast and taking the time to sit down with me.
• 37:08
  Shari Bower: Um, I hope this wasn't too boring or overwhelming for anybody, and that it did provide some helpful information.
• 37:14
  Shari Bower: So thank you.
• 37:15
  Jennifer Johnson: It was my pleasure, and thank you so much for being here.
• 37:18
  Jennifer Johnson: It provided invaluable information.
• 37:19
  Jennifer Johnson: And thank you to all of my listeners.