Fed Chair Powell hears struggles of Black founders at Spelman visit

Powell spoke on the Fed’s role in addressing inequality and heard stories on the unintended impacts from monetary policy
231201 ATLANTA, GA — Federal Reserve Chair Jerome Powell participates in a fireside chat with Spelman College President Helene Gayle in Atlanta on Friday, Dec. 1, 2023. 
(Bita Honarvar for The Atlanta Journal-Constitution)

Credit: Bita Honarvar

Credit: Bita Honarvar

231201 ATLANTA, GA — Federal Reserve Chair Jerome Powell participates in a fireside chat with Spelman College President Helene Gayle in Atlanta on Friday, Dec. 1, 2023. (Bita Honarvar for The Atlanta Journal-Constitution)

Two top Federal Reserve officials heard Friday from Atlanta Black entrepreneurs and others who say an unintended consequence of the central bank’s inflation-fighting policies is that it is harder to get loans and raise funds for their businesses.

At a roundtable at Spelman College, Fed Chairman Jerome Powell and Board of Governors member Lisa Cook listened to insights from Spelman, Georgia Tech and Georgia State University professors and key players in Atlanta’s tech and innovation ecosystem on how monetary policy is impacting Black founders.

Though the Federal Reserve relies on myriad economic data to help guide its decisions, business roundtables also provide policymakers input from people experiencing economic conditions and policy in real time.

Jewel Burks Solomon, managing partner of venture firm Collab Capital, spoke on how founders are facing double pressures in getting funding – from venture capitalists pulling back on investments as well as the increased cost to borrow money because of the Fed increasing interest rates.

Lonnie Johnson, founder of Johnson Research and Development and inventor of the Super Soaker and Nerf toy guns, mentioned how despite his track record of success he is still having trouble raising money for a new venture developing solid-state batteries.

“It’s an uphill battle,” Johnson told Powell and Cook.

231201 ATLANTA, GA — From left, Lonnie Johnson, president and founder of Johnson Research and Development, and Jaycee Holmes, director of curriculum and instruction of the Spelman College Innovation Lab, participate in a roundtable discussion with Federal Reserve Chair Jerome Powell at Spelman College in Atlanta on Friday, Dec. 1, 2023. 
(Bita Honarvar for The Atlanta Journal-Constitution)

Credit: Bita Honarvar

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Credit: Bita Honarvar

The Fed has spent the past two years fighting inflation coming out of the pandemic, attempting to cool the economy and tame high prices without a crash. Home sales in metro Atlanta have softened and job creation has cooled a bit, though it remains strong.

In recent months, the Fed has paused interest rate hikes as inflation has started to decline. Over the six months ending in October, core inflation was down to 2.5%. But in his remarks on Friday, Powell said the Fed is moving forward carefully as “the full effects of our tightening have likely not yet been felt.”

Powell did not indicate that the group was ready to cut interest rates yet, saying it would be “premature” to say with confidence that the Fed has tightened the economy enough or speculate when they might ease up. During a fireside chat with Spelman President Helene Gayle, Powell appeared to push back against investors who believe rate cuts could happen early next year and said hikes are still on the table.

“We are prepared to tighten policy further if it becomes appropriate to do so,” Powell said.

Powell is the first Fed chairman to visit the all-female, historically Black college in its 142-year history. Cook is a Georgia native and Spelman alumna.

Powell’s discussion with Spelman’s Gayle was wide-ranging, from his background as a lawyer and investment banker to the Fed’s role in addressing the racial wealth gap, a particularly pressing issue for Atlanta.

The city has the highest income inequality among large U.S. cities, according to an AJC analysis of data from the U.S. Census Bureau. Powell said the Fed is limited in the tools it has to address the wealth gap, noting that Congress can have more impact. But the central bank can enforce fair housing laws and, perhaps most importantly, impact labor market conditions that can lead to low unemployment rates for Black Americans, he said.

Gayle finished the chat by asking how Powell has fun, especially when his words can move markets.

“This is really as fun as it gets — a really good inflation report,” he said as the crowd laughed.

Over the 12 months ending in October, core inflation (which the central bank measures as everything but the more volatile energy and food prices) was at 3.5%, still above the Fed’s 2% target.

In metro Atlanta, the impacts of the Fed’s moves have been felt particularly in the housing and jobs markets.

In October, the most recent data available, the number of homes sold in the metro was down 14% from the same month last year. And while hiring was solid in October, the pace of job growth this year is down about four percentage points from last year.

Powell and Cook’s visit drew many notable attendees, including Raphael Bostic, president of the Federal Reserve Bank of Atlanta and “60 Minutes” anchor Scott Pelley.

The panelists at the innovation roundtable also spoke about what makes the tech ecosystem in Atlanta unique, particularly its diversity. The city has one of the highest rates of Black business ownership in the country. In 2021, about 8.8% of employer businesses in the metro – 10,689 – were Black-owned, according to the 2022 U.S. Census Annual Business Survey, the most recent data available.

Cook has spent decades researching economics and innovation. She noted that she had interviewed Johnson for some of her research while she was a post-doctoral student in 2002. She spoke about the need for venture capitalists to look more at merit instead of elite credentials when deciding who to fund.

For Powell, the roundtable brought up issues that he hadn’t heard much about.

“This has been incredibly, incredibly interesting and real learning experience for me,” he said.


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