In this undated photo provided by the Federal Reserve Bank of Richmond, Tom Barkin, president of the Federal Reserve Bank of Richmond, poses for a portrait. (Federal Reserve Bank of Richmond via AP)
WASHINGTON (AP) — As president of the Federal Reserve Bank of Richmond since 2018, Tom Barkin is a member of the Fed's powerful committee that sets interest rates. The committee has been engaged this year in an extraordinary drive to support the economy and the financial system through ultra-low rates and new lending programs designed to keep credit markets running smoothly and encourage companies and households to borrow and spend.
Barkin takes part in the rate-setting committee’s discussions, though under the Fed’s rotation system, he is not a voting member of the committee this year.
The Associated Press spoke recently with Barkin about the unusual uncertainty surrounding the economic outlook, how the coronavirus may be affecting financial inequality and the economy's ongoing need for rescue aid.
Q: What's the biggest risk facing the economy right now?
A: The biggest risk is on the health side. Will we have a vaccine or a treatment or will we have a set of infections that causes consumers to withdraw from the economy again? As I’ve talked to my contacts in the district, (among) firms, you see such a wide range of uncertainty that it does lead to a level of caution on things like hiring, on things like investing, on things like spending. And so I do think, similarly on the consumer side, how are you going to engage in commerce if you don’t know if you’re going to be putting your family at risk?
Q: Will inequalities in income or wealth slow the recovery?
A: One of the tragic things about this virus is it’s gone very hard after low-end service-level personal contact jobs. And this question of how many of those jobs will recover if restaurants reopen with only 50 or 60 or 70 percent capacity — you’re going to lose restaurant jobs. If amusement parks and entertainment venues are not able to come back at the same scale or density, you’re going to lose those sorts of lower-pay service-level jobs. And so I do think there is a real risk there — that the normal we get back to will be less robust than the one we just left.
Q: Does the economy need more stimulus from the government or can it recover on its own?
A: One of my concerns as I look at the economy over the next six months, 12 months, 18 months, is whether we will have enough support from (from Congress) to get us back to where we were. That support could be things like deployment of broadband to enhance online learning. It could be things like making Pell Grants available for (job training) programs. My understanding of 2010, 2011, 2012 is that state and local governments had to cut back. And of course, you had the federal government eventually also cutting back. And it would’ve been helpful to have those entities continuing to spend into the recovery. And we’ll need that here as well.
Interviewed by Christopher Rugaber.
Edited for clarity and length.
7 Stocks That Prove Dividends Matter
Dividends can be an equalizing factor when comparing stocks. For example, you can be looking at one stock that is up 5% and another that is up 7% over a period of time. However, the stock that is up 5% pays a dividend while the one that pays 7% does not. That dividend factors into the stock’s total return. Therefore although the former would appear to offer a better return, the stock that pays a dividend may actually provide a higher total return.
Dividends are a portion of a company’s profit reflected as a percentage. However, this percentage changes with the company’s stock price. For that reason, a common mistake investors make is to chase a yield. But a company that pays a 4% dividend yield may be a far better investment than a company with an 8% yield. Here’s why.
The most important attribute of a dividend is its reliability. Getting a solid dividend one year has very little meaning if the company has to suspend, or cut, its dividend the next year. Investors want to own stocks in companies that have a solid history of paying a regular dividend.
Another important consideration is a company’s ability to increase its dividend. This means that the company is increasing the amount of the dividend regardless of stock price. Companies that do this over a specific period of time have achieved a special status. Dividend Aristocrats are companies that have increased their dividend every year for at least the last 25 years. Dividend Kings have increased their dividends every year for at least the last 50 years.
In this presentation, we highlight seven companies that offer a nice dividend and the opportunity for decent growth.
Click on Continue to view the “7 Stocks That Prove Dividends Matter”.
View the "7 Stocks That Prove Dividends Matter".