Jerome Powell is unlikely to weigh in on those baseless charges of Haitian immigrant pet eating this week as the Federal Reserve gathers in Washington. Yet this dark turn in the 2024 campaign towards anti-immigrant rhetoric remains at least tangentially related to economic issues very much on the central bank's mind.
It's a topic, actually, that Powell has already weighed in on.
At issue is the southwestern Ohio town of about 58,000, which has seen an influx of around 15,000 Haitian refugees in recent years looking for economic opportunities. The immigrants came legally under temporary protected immigration status, but their numbers have stretched city resources.
Powell's previous occasion to reflect on all this came this summer — at the prompting of none other than Sen. JD Vance.
Federal Reserve Chair Jerome Powell arrives before a Senate Banking, Housing, and Urban Affairs hearing on Capitol Hill on July 9. (CHRIS KLEPONIS/AFP via Getty Images) ·(CHRIS KLEPONIS via Getty Images)
The town, as Vance relayed at the time, is "a very real example of this particular concern," adding that in Springfield, "There's a whole host of ways that this immigration problem is, I think, having very real consequences."
The conversation that summer day found Powell skeptical on some points, especially Vance's exploration of a broad link between immigration and inflation.
But the Fed chair also noted that immigration could indeed strain specific communities like Springfield on an array of fronts from housing to healthcare as they absorb new residents — especially when "they contribute to an already tight housing market."
It was a policy conversation, and one that economists tend to side with Powell on. But a far cry from current campaign trail rhetoric.
A debate on links between immigration, inflation, and housing
The underlying issues, perhaps currently on the back burner of the 2024 campaign trail conversation, are nevertheless central to the decision of Powell and his colleagues this week as to whether to cut rates by 25 or 50 basis points.
The July conversation between Powell and Vance included Powell offering skeptical notes on what was then an emerging GOP case that inflation and immigration are broadly linked.
"My sense is that in the long run, immigration is kind of neutral on inflation; in the short run it may actually have helped because the labor market got looser," Powell said at the time.
The argument clearly left Donald Trump unconvinced, with the GOP nominee often discussing his plans for mass deportations as, in part, a way to help high prices, especially in the housing market.
The central bank is also weighing arguments this week from the left side of the spectrum that the Fed needs to lower rates as quickly as possible, in part because of the unique relationship between the housing market and interest rates.
Former Treasury official Kitty Richards, now a senior fellow at the left-leaning Groundwork Collaborative, made the case this week: "The Fed's primary inflation-fighting tool — high interest rates — actually makes housing inflation worse by locking up the housing market and limiting investment in housing supply," she argued during a media briefing on Monday.
She added, "High interest rates also directly drive housing costs up for families, most of whom are reliant on mortgages in order to finance housing purchases, and mortgage rates are higher than they have been in a very long time."
Now, a very different conversation
In any case, the rhetoric around Springfield has very clearly taken a turn for the worse in recent weeks. The GOP focus is now on the immigrants themselves, including the evidence-free charges of pet abuse that even made an appearance at last week's presidential debate.
Former President and Republican presidential candidate Donald Trump speaks during a presidential debate with Vice President and Democratic presidential candidate Kamala Harris in Philadelphia on Sept. 10. (SAUL LOEB/AFP via Getty Images) ·(SAUL LOEB via Getty Images)
Officials in Ohio, from the mayor of Springfield to other city officials to the Ohio governor, have said again and again that the charges have no merit. "What we know is that the Haitians who are in Springfield are legal," said Ohio Governor Mike Dewine (a Republican and Trump supporter) on Sunday. "What the companies tell us is that they are very good workers."
Vance has acknowledged that the claims could be false but has nevertheless continued to push them. He said recently on CNN, "If I have to create stories so that the American media actually pays attention to the suffering of the American people, then that's what I'm going to do."
The economic effects of immigration appear mixed for Springfield itself, which is now in the spotlight even as it continues to wrestle with the less salacious issues it had before, like building new affordable housing, ensuring adequate healthcare, and getting more new immigrant drivers trained. (The city has also weathered a series of recent bomb threats.)
Powell is likely to weigh in on broader issues Wednesday afternoon when he speaks to the media. But what he is sure to seek to avoid is the toxic 2024 campaign conversation around Springfield itself.
Ben Werschkul is Washington correspondent for Yahoo Finance.
