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Embargoed Until 2:45 P.M U.S. Eastern Time, Tuesday, July 15, 2025 – Or Upon Delivery Using Data in Monetary Policymaking: A View from the Fed Remarks at the NABE Foundation’s 22nd Annual Economic Measurement Seminar Susan M. Collins President & Chief Executive Officer Federal Reserve Bank of Boston July 15, 2025 Washington, D.C. Engagement with Stakeholders in the Economy Across the Boston Fed’s District – the 6 states of New England Federal Reserve Bank of Boston | bostonfed.org 2 Figure 1 | Personal Consumption Expenditures (PCE) Inflation 8 7 Percent Change, 12-month 6 5 4 3 2 1 0 2018 Total PCE Price Index 2019 2020 2021 PCE ex Food and Energy Price Index 2022 FOMC Inflation Target 2023 2024 NBER-dated recession Source: Bureau of Economic Analysis / Haver Analytics. Federal Reserve Bank of Boston | bostonfed.org 3 Figure 2 | Components of Core PCE Inflation B: Housing C: Services Excl. Housing 12 12 10 10 8 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 -6 2018 2019 2020 2021 2022 2023 2024 12-Month 3-Month 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2023 2024 Percent Change, Annual Rate Percent Change, Annual Rate A: Goods -6 NBER-dated recession Source: Bureau of Economic Analysis / Haver Analytics. Federal Reserve Bank of Boston | bostonfed.org 4 Figure 3 | Civilian Unemployment Rate 16 Percent of Labor Force (SA) 12 8 4 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 NBER-dated recession Source: Bureau of Labor Statistics / Haver Analytics. Federal Reserve Bank of Boston | bostonfed.org 5 Figure 4 | Wage Growth 10 Percent Change, year-over-year 8 6 4 2 0 2018 2019 2020 ECI: Compensation: Private Industry Workers 2021 2022 Indeede Wage Tracker: Posted Wage Growth 2023 2024 NBER-dated recession Source: Bureau of Labor Statistics, Indeed Hiring Lab / Haver Analytics. Federal Reserve Bank of Boston | bostonfed.org 6 Figure 5 | Productivity and Wage Growth A. Real Value Output per Hour B. ECI Growth Adjusted for Productivity 6 Percent Change, 8-Quarter Annualized Percent Change, 8-Quarter Annualized 6 4 2 0 -2 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 4 2 0 -2 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Note: These figures are based on experimental data provided by the Bureau of Labor Statistics Division of Major Sector Productivity. Panel A shows 8-quarter annualized growth in total economy real output less 8-quarter annualized growth in total economy hours worked. Panel B shows 8-quarter annualized ECI growth less growth in the output per hour measure shown in panel A. Source: Bureau of Labor Statistics / Haver Analytics. Federal Reserve Bank of Boston | bostonfed.org 7 Figure 6 | Required Years of Job Experience by Minimum Education Requirement B: Bachelor's Degree or Higher 3.00 5.25 2.75 5.00 Required Years Experience Required Years Experience A: Less than Bachelor's Degree 2.50 2.25 2.00 4.75 4.50 2018 2020 2022 2024 4.25 2018 2020 2022 2024 Source: Lightcast / Author's Calculations . range between the minimum and maximum required number of years experience (red dashed lines) as well as the midpoint (blue line). Note: Figures show the average Note: Figures show the average range between the minimum and maximum required number of years of experience (red dashed lines) as well as the midpoint (blue line) . Source: Lightcast / Author’s Calculations. Federal Reserve Bank of Boston | bostonfed.org 8 20 16 15 12 10 8 5 4 0 0 -5 -4 -10 2016 2017 Real PCE (left scale) 2018 2019 Real GDP (right scale) 2020 2021 2022 2023 2024 Percent Change, 4-quarter Percent Change, 4-quarter Figure 7 | Real PCE and Real GDP -8 NBER-dated recession Source: Bureau of Economic Analysis / Haver Analytics. Federal Reserve Bank of Boston | bostonfed.org 9 Country Figure 8 | Core PCE Shares of Imported Goods, by Country China Rest of World Mexico Canada Vietnam India Ireland Germany Italy Switzerland Japan Taiwan South Korea Thailand France Indonesia United Kingdom Malaysia Singapore Belgium 0.0 0.5 1.0 1.5 Import Contribution to PCE (2023), p.p. Direct Indirect Note: The orange bars show the share of core PCE corresponding to imported goods that are directly consumed by US households. The blue bars show the share of core PCE corresponding to imports that are used as inputs in domestic production. We use the 2023 market share of each country in different BEA categories from US Census Bureau data to estimate each country's countribution to PCE. Source: U.S. Bureau of Economic Analysis, U.S. Census Bureau / Authors' Calculations. Federal Reserve Bank of Boston | bostonfed.org 10 Figure 9 | Price Adjustments in Response to Tariffs Price Adjustments in Response to Tariffs Manufacturing Services We plan to pass on all of the cost increases into sales prices 35% 23% We plan to pass on some of the cost increases into sales prices and to absorb some through reduced margins 52% 28% We plan to pass on some of the cost increases into sales prices and to pass on the rest to other untariffed products or services we provide 4% 8% We plan to absorb all of cost increases through reduced margins 3% 14% Our costs will not be affected by tariffs, but we plan to use tariffs as an opportunity to raise prices 2% 4% Our costs will not be affected by tariffs, and we do not plan to change prices because of tariffs 5% 23% Note: Data come from special questions asked in the Spring 2025 Institute for Supply Management Semi-Annual Report available at: https://www.ismworld.org/supply-management-news-and-reports/reports/semi-annual-economic-forecast/2025/spring/. Source: Institute for Supply Management. Federal Reserve Bank of Boston | bostonfed.org 11 Thank you… Questions and Discussion