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The Examiner

So far as it depends on the course of this government, our relations of good will and friendship will be sedulously cultivated with all nations.

- John Tyler, 10th American President
Inaugurated this day in 1841

Williams Weighs In

The New York Federal Reserve bank this week hired John Williams to be its president and chief executive officer, a position he held with the San Francisco Federal Reserve Bank. If you're wondering about his views, Williams spoke last fall at the Federal Reserve-CSBS research conference on community banking.

The topic: setting a "new normal" for interest rates. To Williams, the "new normal" reflects lower rates of labor market participation, productivity growth, sustainable economic growth, and inflation. 

Key excerpts from his remarks:

The Fed is moving towards a more normal monetary policy, and that means rising interest rates. But...a new normal [is] where interest rates are lower than the heady days of the 1990s and early 2000s.

The new normal is likely to be 2.5 percent, and banks, and everyone else, need to prepare accordingly. 

The sustainable growth rate of the economy has slowed dramatically from prior decades.  I put that growth rate at 1.5 percent for inflation-adjusted GDP, the slowest pace we have seen in our lifetimes. 

What's caused the decline in labor force growth? Two main things: First, the Baby Boomers are retiring in droves. Second, the fertility rate in the United States has been declining and recently reached an unusually low level. Monetary policy can only go so far, and it's beyond my job description to encourage people to have more babies! 

The same thing is true about productivity growth, which also has slowed in contrast with earlier decades. In the 1990s and early 2000s, annual productivity gains averaged 2 to 3 percent. Productivity gains since the recession have generally hovered below 1 percent. 

Stepping back, the broader implication is that conventional monetary policy has less room to stimulate the economy during an economic downtown. Looking through this lens, we will need to lean more heavily on unconventional tools, like central bank balance sheets, keeping interest rates very low for a long time, and potentially even negative policy rates.

You can read Williams' full remarks here.  

April is Financial Literacy Month

States across the nation are pitching in to help consumers identify better financial habits, increase their savings, and plan for retirement.

Financial Literacy Month, occurring each year in April, is an opportunity for financial corporations, nonprofits, and government agencies to promote educational initiatives and resources. The Jumpstart Coalition for Personal Financial Literacy coordinates the work of hundreds of businesses and state and local governments for Financial Literacy Month.

Several state banking departments are already hard at work promoting financial literacy for their consumers. Here is just a small sampling of states participating in Financial Literacy Month:


Pennsylvania Governor Tom Wolf declared April as "Financial Capability Month" in Pennsylvania. In his proclamation, Governor Wolf recognized the Pennsylvania Department of Banking and Securities for its work with CSBS to assist thousands of Pennsylvanians each year. 

The Department also conducts several consumer outreach events year-round, with emphasis on financial literacy and avoiding common financial scams. For senior citizens, the Department will conduct a "Consumer Fraud Bingo" event, a program to help develop a spending plan, and an in-depth discussion on avoiding scams and identify theft, banking basics, and budgeting. For Students, the Department will conduct a presentation combining lessons on credit reports and scores, banking basics, and creating a spending plan.


The Texas Department of Banking supports Financial Literacy Month, promoting the "$mart Kid" Essay Contest. The “$mart Kid” Essay Contest is aimed at helping students develop knowledge of financial concepts, understand budgets, recognize the importance of financial planning, and become better prepared for future roles as consumers, investors, and employees. In support of Financial Literacy Month, the Financial Fitness Greater Austin (FFGA) “$mart Kid” Essay Contest encourages middle school and high school students in the Greater Austin area to answer this year’s “$mart Kid” question. 


The Washington State Department of Financial Institutions is also a partner celebrating April 2018 as Financial Capability Month. Understanding the importance of financial education, Washington Governor Jay Inslee proclaimed April as Financial Capability Month. 

This month presents opportunities for partners like DFI, the Treasurer’s Office, Jump$tart Washington Coalition and the Financial Education Public-Private Partnership (FEPPP) to highlight and support the work being done to increase and improve financial education in our state - and assist the many educators and organizations currently providing financial education to Washington residents. 

“Helping Washington residents improve their financial skills and capabilities is part of DFI’s core mission,” DFI Director Gloria Papiez said. “When more residents understand how to make sound financial decisions and avoid financial fraud, they can protect themselves — and our state as a whole is stronger.”

Gallup Poll on Millennials and Their Banking Habits

Gallup recently conducted a poll on how Millennials think about banking. And while the results might not be terribly surprising -- Millennials rely on digital versus in-person experiences -- they provide more data for banks looking to alter their approach so as to reach what is now the largest living generation of consumers. Indeed, Gallup recommended specific actions banks can take to better reach and serve Millennials, which you can read here and here.

Key stats from the poll:

Millennials are first-generation digital natives. In our recent banking study, Millennials were the most likely generation to use both online (92 percent) and mobile channels (79 percent) -- and they tend to use those channels more frequently than older generations. 

Only 66 percent of Millennials visited a brick-and-mortar branch within the past six months, compared to 81 percent of Baby Boomers and 80 percent of Traditionalists. 

Millennials have the lowest levels of customer engagement with their primary bank (30 percent are fully engaged) compared with Baby Boomers (40 percent) and Traditionalists (51 percent)

(While) Millennials were slightly more likely to say they had a problem...(they) were the least likely generation to report their problem to their bank. 

Then, the kicker: 

Millennial customers recently reported switching their primary bank at a rate that is 2.5 times more often than Baby Boomers and Traditionalists and 1.5 times more than Gen Xers.  

Providing financial services to Millennials requires a thorough understanding of their needs, preferred channels, and problem resolution. And the Gallup results and recommendations advance that cause.