Federal Reserve Bank of Kansas City President Esther George said that even though fiscal stimulus has created lots of demand and monetary policy has made it more difficult, “we are looking at still pretty low growth”Because of supply limitations
George said, “[O]ne of the things I think has been extraordinary to watch during this time, you had a lot of demand come in. So, the support from fiscal stimulus, from monetary policy produced a lot of demand. And yet we are looking at still pretty low growth. And we’re looking at binding constraints on supply and, in particular, looking at the labor market. And I think there, one of the things that will be interesting to watch unfold, I hope research continues to look at this is, we were focused, for the last two decades really, on, is it a demand deficiency in our economy. I think this time we’ve seen that there are some constraints on the supply side. And what structural — the nature of those might be I think is going to be worth keeping an eye on. And I think, longer term, will have implications for monetary policy’s role.”
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