The U.S. economy is “in a really good place” as 2024 begins with inflation coming down and Americans beginning to feel better about their prospects.
That was the assessment Friday from Mary Daley, president and CEO of the Federal Reserve Bank of San Francisco, at the 40th annual Economic Roundtable at the University of San Diego.
Daley said she isn’t optimistic by nature, but “I’m seeing an economy that is responding to monetary policy with inflation coming down.”
“The economy is in a really good place. People feel better,” she said.
Daley is one of the 12 voting members of the Federal Reserve’s Open Market Committee, which sets interest rates and makes other key decisions affecting economic policy.
She stressed that the Fed isn’t yet declaring victory on inflation. It’s running at an annual rate of 3.9% while the target is 2%.
But “we are definitely getting closer,” she said, making the Fed’s job “really one about calibration this year.”
Asked what impact recent increases in the minimum wage will have on inflation, she said it’s not clear and depends on the job and the local economy. “The minimum wage has long been fought about. It really depends,” she said, adding that the minimum wage is really “a social tool.”
On the topic of commercial real estate, she said downtown office space is the category most at risk in 2024 because of higher interest rates and the loss of workers since the pandemic. But she stressed that it’s only the older, less desirable middle-market properties that are truly challenged.
Daley has published research on the impact of racial equity on the economy and noted that society is “leaving talent on the table” without attempting to achieve equity.
“Closing these gaps is not simply fairness. Closing the gaps is about the economic well-being of our society,” she said.
She told the audience that she admires San Diego for taking innovative approaches to workforce training, housing and other pressing problems.
