Federal Reserve Board Governor Lisa D. Cook said inflationary headwinds will likely lead to additional rate hikes and “restrictive” monetary policy in the months ahead.

In a panel discussion Thursday, Oct. 20, 2022, at Milliken & Co.’s corporate headquarters in Spartanburg, Cook praised the local and state economies but said the national situation remains a bit more precarious, with further softening expected over the next year.

Cook’s two-day Spartanburg visit included a tour of local manufacturing operations, a stop at Spartanburg Community College’s Spark Center, and conversations with area business owners.

“The view from Spartanburg covers some of the essential forces in the American economy,” Cook said. “South Carolina’s manufacturing harnesses technology and innovation to stay competitive in an evolving marketplace. Community colleges are training grounds for small businesses and specialized skills needed in local industries. And local businesses are the heart and soul of the economy.”

“What I am indeed witnessing (in Spartanburg) is a dynamic economy,” Cook added.

Cook pointed to the strength of the labor market, noting that the national jobless rate sits at 3.5 % (3.1% in South Carolina and Spartanburg County) and that there are 1.7 job openings per jobseeker in the U.S.

She mentioned that, on the supply side, labor force participation has recovered more slowly than expected and early retirements prompted by the pandemic have not yet reversed.

“Meanwhile, inflation remains stubbornly and unacceptably high,” Cook said. “Much of the surge in inflation over the past year came from supply shocks like global supply chain disruptions and Russia’s invasion of Ukraine boosting energy prices.”

In recent months, Cook said, supply bottlenecks have eased, and global commodity prices have declined. Gasoline prices have fallen in recent months, she said, but other consumer prices have continued to increase rapidly.

“The widespread nature of inflation pressures… suggest that the overall economy is very tight, and the Fed cannot act directly on supply, but it can moderate demand by tightening monetary policy,” Cook said.

She said rate hikes this year have softened interest-sensitive demand, particularly housing.

“With inflation running well above our 2% goal, this likely will require ongoing rate hikes and then keeping policy restrictive for some time,” Cook added. “Inflation is too high. It must come down. And we will keep at it until the job is done.”

Geordy Johnson, president and director of Johnson Management and board member of the Federal Reserve Bank of Richmond, helped organize Thursday’s panel. Allen Smith, president and CEO of OneSpartanburg Inc., introduced the participants. USC Upstate Chancellor, Bennie L. Harris, Ph.D., served as moderator.

The panelists included:

• Jaime Wall, managing director of WJ Partners
• Jamie Fulmer, Spartanburg city councilman and partner at LOOP
• Rob Rain, Spartanburg city councilman and president of Johnson Development Associates Inc.’s Industrial Division
• Paige Stephenson, president and CEO of the United Way of the Piedmont
• Curt Sidden, CEO of American Credit Acceptance

Cook’s visit coincided with German automaker BMW’s announcement Wednesday it will invest $1.7 billion to produce electric vehicles at its Spartanburg County manufacturing plant and to build a new high-voltage battery assembly facility in Woodruff. The company said it will build at least six fully electric car models in the U.S. by 2030.

“I’m an economist and Fed governor,” Cook said. “I love all the wonky equations you would expect. But I think one of the ways to really understand what is going on in the economy is to speak to people where they live and work to understand how economic forces are affecting their lives and livelihoods.”

“With more than $3 billion in investment this year alone, there is indeed something special happening in Spartanburg, South Carolina,” Smith said.

Cook took office as a member of the Federal Reserve System’s Board of Governors on May 23, 2022. She was previously an economics and international relations professor at Michigan State University.

Cook was also a research associate at the National Bureau of Economic Research and a faculty member at Harvard University’s Kennedy School of Government. She served as deputy director for Africa Research at the Center for International Development and was a National Fellow at Stanford University.

From 2011 to 2012, Cook served as a senior economist on the Council of Economic Advisers under President Barack Obama. From 2000 to 2001, she served as a senior adviser on finance and development in the U.S. Department of Treasury’s Office of International Affairs.

Cook earned her bachelor’s degree in philosophy from Spelman College. As a Marshall Scholar, she received a second undergraduate degree in philosophy, politics, and economics from Oxford University. Cook earned her Ph.D. in economics from the University of California, Berkeley.

“We were so pleased to welcome Governor Cook to Spartanburg,” Harris said. “I am so thankful for our panel and the fact that they took time out of their busy schedules to be a part of something that is so vital to this community, to our economy, and this country. Governor Cook will be able to take what she heard from us back to Washington D.C. to help inform policies.”

Panel discussion video: https://vimeo.com/event/2525852

Additional photography: https://flic.kr/s/aHBqjAc2zH

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