Re-examining Fed Chair Powell’s remarks about immigrants in Springfield, Ohio – and their impact on the economy.

Jerome Powell won’t have a chance to ponder the baseless accusations of eating Haiti’s pet this week when the Federal Reserve meets in Washington. However this dark shift in the 2024 campaign in terms of anti-immigrant rhetoric is still related to economic issues very much in the mind of the central bank.

In fact, it’s a topic Powell has already considered.

At issue is the southwestern Ohio city of about 58,000 people, which has seen an influx of about 15,000 Haitian refugees in recent years seeking economic opportunity. Immigrants came legally under temporary immigration protections, but their numbers stretched the city’s resources.

Powell’s last chance to reflect on all of this came this summer — at the urging of none other than Sen. JD Vance.

The situation was the first Senate hearing in July — just days before Vance was selected as Trump’s running mate. The Ohio senator recently raised Springfield with Powell on issues such as the links between immigration costs and housing, as well as the local effects of immigration.

The city, as Vance said at the time, is “a real example of this,” adding that in Springfield, “There are a lot of ways that this immigration problem exists, I think it’s have real consequences.”

The summer day interview found Powell skeptical of some points, particularly Vance’s analysis of the broader relationship between immigration and inflation.

But the Fed chairman also noted that immigration can strain a unique community like Springfield on many fronts from housing to health care as they welcome new residents — especially when they “enter the marketplace.” you are already hard.”

It was a policy discussion, and one that economists like to side with Powell. But it is far from the latest campaign speech.

The debate over the relationship between immigration, inflation, and housing

The underlying issues, perhaps currently at the back of the 2024 campaign conversation, are nevertheless central to Powell and colleagues’ decision this week on whether to cut rates by 25 or 50 basis points.

Another important factor is the housing component, which is still the most difficult part of the overall cooling picture.

A July conversation between Powell and Vance included Powell making questionable points about what was then the GOP’s emerging case that inflation and immigration were broadly linked.

“My point is that in the long run, immigration is kind of inflation neutral; in the short run it may actually have helped because the labor market went down,” Powell said at the time.

The story continues

The debate clearly left Donald Trump unconvinced, with the GOP nominee often touting his plans for mass deportations as, in part, a way to help raise prices, especially— hall in the housing market.

The central bank also weighed in on arguments this week from the left side of the rate that the Fed needs to cut rates as soon as possible, in part because of the unique relationship between the housing market and interest rates. profit.

Former Treasury official Kitty Richards, now a senior fellow at the left-leaning Groundwork Collaborative, made the case this week: “The Fed’s main tool to fight inflation — higher interest rates interest rates – actually worsen housing prices by closing the housing market and reducing housing supply,” he argued during a press conference on Monday.

He added, “High interest rates also increase the cost of living for families, many of whom rely on mortgages to pay for their homes, and mortgage rates are high.” than they have been in a very long time.”

Now, a very different conversation

However, the talk about Springfield has taken a turn for the worse in recent weeks. Now the GOP is targeting immigrants themselves, including the unproven allegations of domestic animal abuse that even came to the fore in last week’s presidential debate.

Ohio officials, from Springfield’s mayor to other city officials to Ohio’s governor, have repeatedly said the allegations are without merit. “What we do know is that the Haitians in Springfield are legal,” Ohio Governor Mike Dewine (a Republican and Trump supporter) said on Sunday. What companies tell us is that they are very good employees.

Vance has admitted that the allegations may be false but continues to press them anyway. He said recently on CNN, “If I have to make up stories to get the American media to pay attention to the plight of the American people, then that’s what I’m going to do.”

The economic impact of immigration appears to be mixed for Springfield itself, which is now in the spotlight even as it continues to struggle with some of the problems it once had, such as housing. affordable new cars, ensuring health care, and training new immigrant drivers. (The city has also faced a series of recent bomb threats.)

Powell is likely to participate in a broader discussion Wednesday afternoon when he speaks to the media. But what he’s determined to avoid is the toxic 2024 conversation surrounding Springfield itself.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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