A Trip to Alaska With San Fran Fed President Mary Daly

SPEAKER_1 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Jim Jagger (0:08)

Seconds away.

Cheryl Beckham (0:08)

The question is not if they'll cut interest rates.

Jim Jagger (0:11)

The question is by how much?

SPEAKER_4 (0:13)

The answer to your question, John, is a quarter percentage point cut as expected, but Fed officials also see two more cuts this year in October and December.

Tracy Alloway (0:22)

It's Wednesday, September 17th. The Federal Open Market Committee has just wrapped up their most recent meeting in Washington, DC. And after two days of analyzing and debating and forecasting, the committee voted to cut interest rates by 25 basis points.

SPEAKER_6 (0:37)

I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. While the unemployment rate remains low, it has edged up. Job gains have slowed.

Joe Weisenthal (0:50)

Yeah, it's the first time the Fed has cut in over a year, move coming after months of debate. And on the one hand, the labor market is slowing. But on the other hand, we're still trying to figure out what the impact of the tariffs is on prices and consumer spending is still going strong.

Tracy Alloway (1:05)

Right. You could make a convincing case for deeper cuts, but you could also make a case for even raising benchmark rates at this point. And we don't tend to get a lot of these types of Fed meetings where the outcome is so debatable. So we have to ask, how did the central bank actually make the decision to cut? To do that, let's back up six weeks to the beginning of August and head north. In fact, we are going 3,000 miles north.

Mary Daly (1:39)

I added to my collection of flies for fly fishing yesterday.

Tracy Alloway (1:44)

I am slightly obsessed with fishing lures. I don't even fish.

SPEAKER_1 (1:48)

I don't know why.

Mary Daly (1:48)

I like to fish.

Tracy Alloway (1:49)

That's Mary Daly, president of the Federal Reserve Bank of San Francisco.

Mary Daly (1:53)

So here's why I get these flies. I go to places all over that have fly fishing, and then I buy a fly that's specific to their area to remind you. It's sort of geeky, but it reminds me that everybody fishes, but that you have to have a local knowledge to fish well.

Tracy Alloway (2:10)

Yeah, you have to have the fly that's in season for that particular location.

Mary Daly (2:14)

And it kind of is why when you go to the places to visit to learn more about the economy, you sort of have to, you can understand it, but you don't know it until you have the locality so you don't do it well.

Tracy Alloway (2:23)

Daly oversees the 12th district of the Fed. It's the largest of the districts and includes the nine most western US states plus the most northern, the last frontier, the Great Land, the sourdough state. I am talking about Alaska, obviously.

Joe Weisenthal (2:39)

In early August, Mary Daly visited Anchorage, the largest city and biggest port in Alaska. It was actually her third visit to the state this year, and she's on a mission of sorts.

Tracy Alloway (2:49)

An expedition?

Joe Weisenthal (2:50)

Sure. She's on a northern expedition to try to find answers to the questions that everyone, all Fed officials, everyone else, are trying to constantly puzzle out right now. What is going on with the US economy? Where is it headed?

Mary Daly (3:02)

I've heard that everywhere we've gone, that the city is under so much pressure. And it's hard to, what is your diagnosis about how this happened?

Tracy Alloway (3:09)

So what was she seeing? And how did it actually inform the Fed's decision to cut rates a month later? On this special edition of the Odd Lots podcast, we are going to follow along as Daly tours her district, speaking to local business leaders, like a factory that makes parts for the oil industry, and the airport, and the port itself, to try to get a closer look at the giant logistics hub that is the city of Anchorage.

Joe Weisenthal (3:44)

You know, every town in the world, I think, probably likes to describe its residences, quote, scrappy, unquote. But this really is like the first place I've been where I think that might actually be true. People in Alaska really do seem scrappy.

Tracy Alloway (3:57)

They have to be to get along up here. We really are on the edge of this vast wilderness. In fact, one thing we learned is that people up here love to compare the size of their state to how many Texas's it would fit in.