Esther George kicked off her tenth and final year as president and chief executive of the Federal Reserve Bank of Kansas City by sharing her economic outlook with Central Exchange (CX) today.

She thanked CX in her opening comments for being her first big public speech and for this annual opportunity. She also said, “CX has been an important part of Kansas City’s success as it provides support for women to develop their leadership abilities and contribute to the momentum in our community. Our partnership with CX has benefitted a number of women leaders here at the Kansas City Fed, including me.”

We got into the current inflation situation because of two main things:

⬛ Shock. The shock of Russia’s invasion of Ukraine affected energy and commodity food prices most of 2022. The shock of the pandemic took its toll on prices and systems too. Both of those ended up affecting business and household purchases across the globe.

⬛ Shift. The shocks led to significant shifts between supply and demand, which caused an imbalance and fluctuating prices. Remember those photos of ships packed with goods waiting to deliver to US shores? Now, those ships are gone. Supply is stable, demand for those goods has stabilized, and prices have too. Demand for some services has increased, however, but supply is low because of the tight labor market. The shifting patterns contributes to the economic situation.

President George was very clear that the Federal Reserve is committed to restoring economic stability. She mentioned that the longer inflation sticks around, the more we consumers and business leaders plan around it, which makes it harder to influence.

⬛ Shade on the path. There are four unknowns preventing a crystal clear path for the Fed as it walks the path forward. President George anticipates inflation could be with us in 2025, and these issues shade the forecast.

1) Global outlook remains unsettled. The US is not going to get a boost from Europe or China. They have their own economic challenges right now.

2) Household liquidity. As spending during the pandemic was curtailed, US households saved a lot more of their incomes. Are we all going on spending sprees or keeping our money? Our choice will affect the economy.

3) Reduction of the Fed’s balance sheet. This goes back years and was interesting to hear about. The Fed bought assets to boost the economy during the last recession of 2008-2009. Now, it needs to get rid of those assets to bring its balance sheet down to the size it should be to do its job. The Fed should not be so big that it influences the markets, so this is a good thing but it takes time.

4) Tradeoffs between inflation and employment remain complicated and difficult.

President George made a remark at the end of her talk that demand is not the be-all-end-all cure for growth. Apparently prior to the pandemic, the Fed focused most of its economic solutions around boosting demand. As we have seen in recent years, however, there are supply issues to face when demand increases. When demand was boosted, the supply could not meet the demand, and that caused gigantic issues for the economy.

It caused issues for people.

Those are issues the Federal Reserve will face as President George retires at the end of this month.

During the Q&A portion of today’s talk, President George was asked to share a key lesson learned over her career. She answered saying she found “an organization that was supportive if you were willing to put in the work.”

There’s something to ponder: is your company supporting you (assuming you are putting in the work)? Or, do they keep giving you more work, assigning more teams, putting you on more projects without any talk of a raise or promotion? If that’s happening, what are you getting out of that? What’s your end game?

Another question asked was about highs and lows of her career.

President George said the best part of her career is, “The people who work for the Federal Reserve take this seriously. They are attentive to what we have to do on behalf of the American public. They are the highlight of my career.”

There will be big shoes to fill after President George exits the Fed in a few weeks. She did not announce what is next for her. Here’s hoping she walks those shoes into another organization in Kansas City.