Mary Daly, the president of the Federal Reserve Bank of San Francisco, spent the past week in
Las Vegas, hosting a fireside chat at the Windmill Library. Her visit offered Nevadans an
opportunity to ask pressing economic questions directly to the influential policymaker.
One of the primary concerns discussed was the possibility of interest rate cuts this year. Daly, a
voting member of the Federal Open Market Committee, mentioned that while three rate cuts are
the median projection for 2023, this should be seen more as a forecast and not a commitment.
She emphasized the importance of the Federal Reserve maintaining its credibility by requiring
thorough analysis before making any decisions, rather than just reacting to fluctuating data.
Market analysts have adjusted their expectations for the first rate cut, moving it from mid-year to
September, after the Federal Reserve decided to maintain current rates in March, defying earlier
predictions of a reduction.
Affordable Housing a Key Issue
During the discussions, housing affordability was highlighted as a critical issue. Daly has seen
increased cooperation among local stakeholders during her visits over the years and noted the
city’s growth into sectors like sports and entertainment. This diversification could enrich Las
Vegas’s economy and attract a more varied group of visitors in the future.
“The remedy is to build more housing and then as you go out into your career, you’ll be able to
catch up and get something,” Daly said. It feels like it constrains your choices to have to double
up or find ways to make tradeoffs you can afford for housing.”
“I came out of school in high inflation and I know what it feels like. It can feel like it’s never going
to change,” Daly continued. “But it is changing. It makes that sense of “this is where it is now,”
but if I do what I need to do, invest in myself, make smart decisions on how to make ends meet.
You’ll find yourself building up.”
Wage Growth Surpasses Inflation
Another positive development is the rise in average hourly earnings across the U.S., which have
been growing faster than inflation since July 2023, enhancing real purchasing power for many
workers. However, this wage growth has not been uniform across all sectors; the
leisure/hospitality and financial services sectors have seen significant increases, while IT,
mining, and manufacturing have lagged behind.
Strong Job Market Performance
The latest job figures also reflect a strong labor market, with nonfarm payrolls increasing by
303,000 in March, well above expectations, and the unemployment rate dropping to 3.8%.
Daly’s visit shed light on the intricate factors that the Federal Reserve considers when shaping
monetary policy, and how local feedback can impact future decisions regarding interest rates.
