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Fed presidents: Benefits of US economic growth not shared equally

The U.S. economy remains strong, but the heads of three Federal Reserve banks from around the country said some parts of their regions are not participating in the growth story.

In the Southeast, the picture is "positive," especially in cities such as Atlanta; Nashville, Tenn.; New Orleans; and Birmingham, Ala., said Raphael Bostic, president of the Federal Reserve Bank of Atlanta. "But then, there's everywhere else," he added, with small towns "having a different experience."

For Bostic, that creates uncertainty around key metrics that the Fed considers when determining monetary policy.

"I'm scared still, from the Great Recession," Bostic said, referring to the Fed's lack of early awareness of the risks from subprime mortgage lending. He said he asks his team to look for trends in the data where they have not historically looked.

"We're trying to find a trend before it shows up in data," he said.

Bostic joined fellow regional bank presidents Charles Evans, of the Chicago Fed, and the Kansas City Fed's Esther George, on a Nov. 27 panel at a conference sponsored by the Clearing House and the Bank Policy Institute in New York.

Though the national data "projects strength," Evans said, "we've heard a lot of commentary about tariffs, trade, the international environment."

And with General Motors Co. announcing a day earlier that it was closing several manufacturing plants, including in the U.S., Evans said that while the auto industry had been strong throughout the recovery, "the strength of our recovery has plateaued at this point."

George noted that most of the industries in her region are doing well, except for the agricultural sector.

"For the last several years, farm incomes have been depressed as commodities prices fall," she said. "On top of that you have some of the trade issues with China, which will not help at all."

The Fed last raised the federal funds rate to a range between 2.00% and 2.25% at its September meeting; market participants expect it to raise rates again in December.

Bostic is a voting member of the Federal Open Market Committee this year; Evans and George will be voting members next year.