Jeffrey C. Fuhrer, who has worked for the Federal Reserve Bank of Boston for 23 years, is executive vice president and senior policy adviser to Boston Fed president Eric Rosengren . Fuhrer, who earned his PhD in economics from Harvard University, sets the agenda for a research staff that identifies and analyzes trends in the New England and US economies. He spoke with reporter Megan Woolhouse about persistently low inflation, the 2024 Olympics, and how he learned to play the fife.
1Fuhrer, 57, has spent many years trying to understand what makes inflation move up or down, and right now the question is how to make it go up. The US inflation rate is about 1.5 percent a year, below the Federal Reserve’s 2 percent target. Too-low inflation, Fuhrer said, indicates that not all factories and businesses are humming, and more people are unemployed.
“It’s just a symptom of a poorly functioning economy that’s under capacity,” he said.
2Consumers might think falling inflation is good thing because goods cost less. But Fuhrer said falling prices create an incentive for consumers to postpone purchases, which leads companies to cut production, which in turn slows economic growth and job creation. Wages of US workers, which have stagnated for decades, also are affected because employers feel less inclined to increase wages when goods can be bought more cheaply.
“Personally, as a forecaster you have to worry somewhat that it will stay persistently low. It’s a concern. Even if your forecast calls for it to go up, you can’t be certain of that, and there’s a risk that it stays low or edges down a bit more. So that’s part of my set of worries.”
3Fuhrer, a father of three adult children, lives with his wife in a historic farmhouse in Littleton. He also participates in Revolutionary War battle reenactments as a member of the Boxborough Minutemen, where he learned to play the fife. Fuhrer said he always had a musical side; he played piano and drums at an early age, joined bands in the 1970s, and studied music composition and analysis — as well as economics — as an undergraduate at Princeton.
“I continue to write and arrange music for choirs and instrumental ensembles.”
4John Fish, the driving force behind Boston’s Olympics bid, is also deputy chairman of the Boston Fed’s board. Fuhrer said he’s still undecided about the Olympics; they don’t always deliver the desired economic boost to the host but can bring attention to areas that need improvement, such as transportation. As the region pursues the Games, Fuhrer added, the effort should be about “human capital” — finding ways to offer employment and educational opportunities to low-income people.
“The history of the Olympics is not terrific for the cities that have hosted. They often spend huge amounts, and they don’t reap all the benefits. I’m an optimistic kind of person and at least with people doing careful planning, that could turn into good stuff for Boston.”
5Fuhrer said federal rules prohibit him from accepting gifts worth more than $25. He recounted a visit by a group of bankers from Azerbaijan who presented him with a small, hand-woven silk rug worth more than $10,000. Not wanting to offend his guests by declining it, he accepted it into the Fed’s art collection.
“We’re pretty scrupulous. It’s hanging on the walls here somewhere.”