LOS ANGELES–(BUSINESS WIRE)–President and Chief Executive Officer of Cathay General Bancorp and Cathay Bank, Chang M. Liu, has been appointed by the Federal Reserve Bank of San Francisco to serve as a member on its Los Angeles Branch Board of Directors. Moreover, Mr. Liu has been elected as a California member director by the Federal Home Loan Bank of San Francisco to serve a four-year term between January 1, 2023, and December 31, 2026.

The Federal Reserve Bank of San Francisco represents the Twelfth District of the Federal Reserve System—the central bank of the United States. The Twelfth District comprises nine western states—Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington—plus the Northern Mariana Islands, American Samoa, and Guam.

The Federal Home Loan Bank of San Francisco is a cooperatively owned wholesale bank helping local lenders in Arizona, California, and Nevada build strong communities, create opportunities, and improve lives.

“I am incredibly honored and excited to take on both of these new roles. I look forward to working with the San Francisco Fed and FHLBank San Francisco to help create new opportunities in the region and build strong communities,” said Mr. Liu

In addition to serving as a board member on the Board of Directors of Cathay Bank and its holding company Cathay General Bancorp, Mr. Liu’s directorship extends to serving on the board of directors of the Western Bankers Association, the Board of Advisors for the UCLA Anderson Forecast, the American Cancer Society’s CEOs Against Cancer group, and the Foothill Family Service.

About Cathay Bank

Cathay Bank, a subsidiary of Cathay General Bancorp (Nasdaq: CATY), opened its doors in 1962 in Los Angeles to serve the growing immigrant community. Today, we operate over 60 branches across the US, with a branch in Hong Kong, and representative offices in Beijing, Shanghai, and Taipei. While much has changed over six decades, our pursuit and dedication has only grown stronger. Then, now, and always, we go above and beyond, so you can, too. Learn more at cathaybank.com. FDIC insurance coverage is limited to deposit accounts at Cathay Bank’s US domestic branch locations.

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Inflation has remained at levels well above the Federal Reserve’s inflation goal of 2% for over a year. Separating the underlying data from the personal consumption expenditures price index into supply- versus demand-driven categories reveals that supply factors explain about half of the run-up in current inflation levels. Demand factors are responsible for about one-third, with the remainder resulting from ambiguous factors. While supply disruptions are widely expected to ease this year, this outcome is highly uncertain.

Inflation declined rapidly at the onset of the pandemic in the spring of 2020 before taking a dramatic turn upward in early 2021, rising to levels that remain well above the Federal Reserve’s longer-run goal of 2% on average. Researchers and policymakers have pointed to both supply and demand factors as being responsible for elevated inflation. For instance, Barnichon and Shapiro (2022) showed the impact of supply-related factors such as labor shortages, while Barnichon, Oliveira, and Shapiro (2021) and Jordà et al. (2022) demonstrated the importance of heightened demand stemming from pandemic-related fiscal relief. The extent to which either supply or demand factors are responsible for higher inflation levels has important implications for monetary policy. As Fed Chair Powell stated in a recent interview, “What [the Fed] can control is demand, we can’t really affect supply with our policies…so the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control” (Marketplace 2022).

In this Economic Letter, I quantify and track the impact of supply- and demand-related factors on personal consumption expenditures (PCE) inflation. Similar to the methodology introduced in Mahedy and Shapiro (2017), and outlined in Shapiro (2022), I assess inflation rates by spending category. I divide categories in the PCE basket into supply- and demand-driven groups. Demand-driven categories are identified as those where an unexpected change in price moves in the same direction as the unexpected change in quantity in a given month; supply-driven categories are identified as those where unexpected changes in price and quantity move in opposite directions. This methodology accounts for the evolving impact of supply- versus demand-driven factors on inflation from month to month. To help monitor these changes, the San Francisco Fed has launched a new Supply- and Demand-Driven PCE Inflation data page with monthly data updates.

My analysis highlights that both supply and demand factors are responsible for current elevated inflation levels. Supply factors explain about half of the difference between current 12-month PCE inflation and pre-pandemic inflation levels, and the effects appear to be rising more recently. Demand factors are responsible for about a third of the difference, and those effects appear to be diminishing more recently. The remainder is due to factors that cannot be definitively labeled as supply or demand. The large impact of supply factors implies that inflationary pressures will not completely subside until labor shortages, production constraints, and shipping delays are resolved. Although supply disruptions are widely expected to ease this year, this outcome is highly uncertain.

Separating supply and demand drivers

This analysis uses the more than 100 goods and services categories in the PCE index. For each month of data, I separate the categories where prices moved due to a change in demand from those where prices moved due to a change in supply. To do so, I rely on simple microeconomic theory: Shifts in demand move both prices and quantities in the same direction along the upward-sloping supply curve, meaning prices rise as demand increases. Shifts in supply move prices and quantities in opposite directions along the downward-sloping demand curve, meaning prices rise when supplies decline.

Each month I estimate the changes in the price level and quantity level of each category. It is important to isolate the unexpected components of the changes in prices and quantities, as opposed to the simple change itself. This is because prices and quantities generally continue an existing trend. These expected trend components are not likely to represent a shift in demand or supply, but instead reflect longer-run factors such as technological improvements, cost-of-living adjustments to wages, or demographic changes like population aging.

Extracting the unexpected components of the monthly changes in price and quantity for each category is an iterative process. I run 10-year-window rolling regressions for both price and quantity. For example, the first window begins in January 1988, the first period PCE data are available at the detailed level, and ends in December 1997. This generates predicted values for price and quantity in January 1998, which I then compare to the actual values of price and quantity in that same month. If the actual values of price and quantity are both above or both below their predicted values, the category is labeled as “demand-driven” in January 1998. If the difference between the actual and predicted values are of opposite signs, the category is labeled as “supply-driven” in that month. If either of the actual values is close enough to its predicted value that the difference is statistically indistinguishable from zero, the category is labeled as “ambiguous” in that month. I then roll the data window forward one month and repeat the process. I iterate this process for each month until I reach the last window of data, which for this Letter begins in May 2012 and ends in April 2022.

Categories that experience frequent supply-driven price changes include food and household products such as dishes, linens, and household paper items. Categories that experience frequent demand-driven price changes include motor vehicle-related products, used cars, and electricity. However, assessing the past two years of data reveals some changes in which categories experienced demand and supply shocks in the post-pandemic period. Specifically, categories with extraordinarily frequent supply-driven price changes in 2021 and 2022 include products with known supply constraints during the pandemic, such as new automobiles, fuel, and repair services. Categories with extraordinarily frequent demand-driven price changes during this period include many goods consumed at home—for example, furniture, clothing, toys, video equipment, and cookware—as well as services related to reopening from pandemic-related closures, such as restaurants and museums.

Figure 1 shows the contributions to 12-month headline PCE inflation from supply- (green) and demand-driven (blue) inflation between 1998 and 2022. Yellow sections show the ambiguous portion of PCE inflation that is not labeled as either demand or supply driven. I calculate the monthly contributions to inflation by multiplying the change in price for a given category by its most recent respective weight in the PCE index. The monthly contributions for demand-driven, supply-driven, and ambiguous categories are then calculated as the sum of contributions from all items within that category. The contributions for demand-driven and supply-driven inflation are then calculated as the 12-month trailing sum of their respective monthly contributions. This generates a series that can be directly compared to the year-over-year PCE inflation rate.

Figure 1
Supply-driven and demand-driven contributions to year-over-year PCE inflation

Note: Data available at Supply- and Demand-Driven PCE Inflation. Gray shading indicates NBER recession dates.

The changes in patterns over time show some intuitive dynamics. The contribution of demand-driven factors to headline PCE inflation declines during recessions. The collapse in airline travel immediately after September 11, 2001, is labeled as demand-driven and the sharp energy price declines in 2014 and 2015 are identified as supply-driven.

Inflation drivers over the pandemic period

To get a sense of whether supply or demand factors are responsible for current elevated inflation levels, I compare current supply- and demand-driven inflation to their average levels from the 10 years before the pandemic. During the pre-pandemic period, PCE inflation averaged 1.5%, considerably below the April 2022 rate of 6.3%. Figure 2 compares the most recent contributions of supply-driven inflation in panel A and demand-driven inflation in panel B against their respective 2010–2019 averages. Supply-driven inflation is currently contributing 2.5 percentage points (pp) more than its pre-pandemic average, while demand-driven inflation is currently contributing 1.4pp more. Thus, supply-driven inflation explains a little more than half of the 4.8pp gap between current levels of year-over-year PCE inflation and its pre-pandemic average level. Demand factors explain a smaller share of elevated inflation levels, accounting for about one-third of the difference. The ambiguous category, which is not shown, explains the remainder of the difference.

Figure 2
Contributions of supply- and demand-driven factors to headline PCE inflation

Note: Gray shading indicates NBER recession dates.

Repeating the same exercise with core PCE inflation, which excludes historically volatile food and energy categories, results in somewhat similar patterns. However, supply and demand factors each explain about half of elevated core inflation levels. Specifically, supply- and demand-driven factors each explain about 45% of the 3.3pp gap between current levels of year-over-year core PCE inflation and its pre-pandemic average level. Monthly results of these contributions to core PCE inflation are available on the data page.

Finally, I assess the contributions to annualized monthly changes in headline PCE inflation. This provides a higher frequency depiction of how supply and demand factors affected inflation over the pandemic period. Figure 3 breaks down these contributions over past five years, showing the one-month changes used to construct the 12-month trailing sums shown in Figure 1.

Figure 3
Contributions to annualized monthly changes in inflation

Note: Gray shading indicates NBER recession dates.

The decline in inflation at the onset of the pandemic was driven by a decrease in demand factors, while the surge in inflation in March 2021 was mainly due to the increase in demand-driven factors. During this period the economy began to reopen from pandemic-related public health policies, and the American Rescue Plan enacted in March 2021 further stimulated demand factors. These factors began to slow in the summer of 2021 with an increase COVID-19 infections associated with the Delta variant, but demand reemerged in the fall as the Delta wave subsided.

Meanwhile, supply factors began to arise in April 2021, indicating a slightly delayed response from the economy reopening. Supply-driven inflation has remained elevated since then and has accelerated more recently. This acceleration is attributable to food and energy supply disruptions, including those associated with the invasion of Ukraine.

Conclusion

Analysis in this Letter shows that supply factors are responsible for more than half of the current elevated level of 12-month PCE inflation. This in part reflects supply constraints from continued labor shortages and global supply disruptions related to the pandemic and the war in Ukraine. While demand factors played a large role in the spring of 2021, they explain only about a third of recent elevated inflation levels. Factors that cannot be labeled as either demand or supply are also playing a nontrivial role.

These results showing that factors other than demand account for about two-thirds of recent elevated inflation highlight some risks for the economy. Because supply shocks raise prices and suppress economic activity, the prevalence of supply-related factors raises the risk of entering a period of low growth and elevated inflation levels. This risk depends crucially on how long labor shortages and global supply disruptions persist. While supply disruptions are widely expected to ease this year, this outcome is highly uncertain.

Adam Hale Shapiro is a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco.

References

Jordà, Òscar, Celeste Liu, Fernanda Nechio, and Fabian Rivera-Reyes. 2022. “Why Is U.S. Inflation Higher than in Other Countries?” FRBSF Economic Letter 2022-07 (March 28).

Barnichon, Regis, Luiz E. Oliveira, and Adam Hale Shapiro. 2021. “Is the American Rescue Plan Taking Us Back to the’60s?” FRBSF Economic Letter 2021-27 (October 18).

Barnichon, Regis, and Adam Hale Shapiro. 2022. “What’s the Best Measure of Economic Slack?” FRBSF Economic Letter 2022-04 (February 22).

Mahedy, Tim, and Adam Hale Shapiro. 2017. “What’s Down with Inflation?” FRBSF Economic Letter 2017-35 (November 27).

Powell, Jerome. 2022. “Inflation, Soft Landings and the Federal Reserve.” Interview by Kai Ryssdal, Marketplace Business News Podcast, NPR, May 12. Audio, 27:38.

Shapiro, Adam Hale. 2022. “A Simple Framework to Monitor Inflation.” FRB San Francisco Working Paper 2020-29.

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With inflation reaching a 40-year high, the price of basic goods and services has gone up, and the money in your pocket doesn’t stretch as far as it used to.

Inflation is much too high, and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down. (Federal Reserve Chair Jerome Powell, Press Conference, May 4, 2022)

To help lower inflation, the Federal Open Market Committee (FOMC) has started tightening monetary policy by incrementally raising the target range for the federal funds rate.

In other words, the Fed is raising interest rates.

Why is this important?

This increases short-term borrowing rates for commercial banks. The rate then gets passed down to consumers and businesses, raising interest payments for debt like auto loans, credit cards, business loans and mortgages.

When it costs more to borrow, economic activity tends to slow down, both through reduced investment activity by businesses and reduced spending by consumers.

This reduction in overall demand can offset price pressures and bring inflation down.

With these actions, the FOMC is aiming for a policy path that will bring inflation back to its average 2% goal while keeping the labor market strong.

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May 26, 2022

What is the role of care work in supporting the ongoing economic recovery from the pandemic?

Research from the San Francisco Fed shows that the pandemic’s disruptions have forced many mothers with children at home to drop out of the labor market—and Black and Hispanic mothers have been hardest hit.

In a Fed Listens event hosted by the SF Fed last November, researchers and leaders from the public, private, and nonprofit sectors discussed how better supporting care work can contribute to a more inclusive economic recovery.

“Dependent care is an essential ingredient to supporting work,” said SF Fed President Mary Daly, pointing out that an overall low unemployment rate doesn’t signal that everyone who wants a job can get one. “Some of the barriers are not about job openings, but about the network of things that support work.”

Here are four takeaways from the Fed Listens dialogue with experts. Quotes are lightly edited for clarity.

1. Child care is prohibitively expensive—and even for those who can afford it, COVID has reduced availability of care.

“There is a real misalignment between when trades workers need the care and when care providers are available. Parents in the trades rely largely on informal care arrangements…because of the cost and the availability of care.”

–April Sims, Secretary Treasurer, Washington State Labor Council, AFL-CIO

This example shows how access to affordable child care is particularly challenging for workers with nontraditional or unstable work hours.

A Washington State Labor Council, AFL-CIO survey of trade workers—two-thirds of respondents who were men— found that 63% of respondents said they live in a child care desert, with low or no access to child care services.

In California, about 80% to 90% of child care programs that closed during the pandemic have reopened. The state is also reporting drops in care licensing. Currently operating programs are experiencing disruptions due to ongoing COVID cases, which result in programs being shut down for a week or more.

2. It’s not enough to focus on affordable care—we also need to invest in care professionals.

“The home care workforce is an essential workforce…they need to be prioritized.”

–Cheryl Miller, Executive Director, Oregon Home Care Commission

“We’re really quite a ways away from paying what [child care] providers and teachers need to earn in order to be valued the way that we value virtually everything else.”

–Michael Olenick, President and CEO, Child Care Resource Center

Experts at the event agreed that solutions need to focus on both reducing the cost of care and raising the income of care workers. Care professionals—a majority of whom are women, immigrants, or people of color—are often the lowest paid and undervalued for their work.

In Oregon, collective bargaining has led to increases in wages, benefits, and development opportunities for home care workers in recent years. California has also seen wages rise through collective bargaining, but it is still lower than it should be, said Olenick.

3. Offering flexibility in work schedules can help mothers stay in the job market.

“Much of the adverse impact on mothers is partially offset by the ability to set working hours and having flexibility in work schedules.”

–Nicolas Petrosky-Nadeau, Vice President, Economic Research, Federal Reserve Bank of San Francisco

Petrosky-Nadeau’s research found that the flexibility to work remotely had little effect on whether or not mothers stayed in the labor market, but those who had the flexibility to set work schedules stayed employed in greater numbers than those who could not set their schedules.

4. Businesses have an opportunity to attract and retain talent by providing benefits that matter to employees, like child care assistance, and rethinking working models.

“[There’s no better way for companies] to appreciate their staff, to show them that they care, than by coming up with programs to ensure that the children of their employees are safe, and that parents can come to work and be their best self.”

-Lilia Vergara, Director of Human Resources, Dr. Bronner’s

At Dr. Bronner’s, employees cited child care as a top concern on multiple surveys during the pandemic. To ensure that employees were supported during a time of increased demand at the soap company, Dr. Bronner’s partnered with other companies to increase their child care assistance program, offering up to $7,500 a year for child care.

In addition to child care support, companies could look at offering flexibility for workers, training and development, and consistent benefits across roles and levels to help attract and retain talent.

For more details, read the full event summary or watch the event recording on our Fed Listens page.

Fed Listens is a series of community outreach events that first launched in 2019. In 2021, the focus of Fed Listens events was on the economic recovery from the COVID-19 pandemic. Learn more about the Fed Listens initiative and other events at the Board of Governors information site.

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The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.

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May 24, 2022

Across my research on different areas of the financial system—mainly housing and credit—a common theme bubbles up: financial inclusion. While insufficient access to financial systems has long been understood as a problem for people with low incomes, I’ve been looking at how people of color and people in immigrant communities struggle for financial equity, independent of income levels.

I have experienced this paradox in my own life. I was raised in Wisconsin and Minnesota by my parents, who are immigrants from Argentina. To me, growing up in an immigrant family meant being bilingual, living far from family, and observing traditions that were sometimes different from our neighbors’. Thankfully, I never had to experience the financial challenges that I saw other immigrants—like some of my mother’s clients as a medical interpreter—face. Still, when I entered adulthood, I experienced a challenge accessing financial services related to my status as a second generation American: I couldn’t get a credit card.

I didn’t have a credit card during college. My dad told me not to worry about it until I graduated. I was on track to get a good job, so we figured I wouldn’t face any barriers. But after I graduated and got a good job, every credit card application I filled out was denied. I went to my local bank branch and asked for an explanation. It turned out I was being denied because I didn’t have a credit history.

What my family didn’t know, but some American-born parents knew, was that it’s easy to open an undergraduate student credit card and start building credit. When my brother went to college, I made sure he got a student credit card so he wouldn’t have to fight the same way I did.

An Early Focus on Asset Building

Growing up, I observed my mom’s work as a Spanish-language interpreter serving immigrants with low incomes. I saw the economic challenges many immigrant families face, and it motivated me to focus my own career on exploring and eliminating these issues. I want to make sure that people living in immigrant communities have the opportunities that I was fortunate enough to have.

When I was an undergraduate, the book The Hidden Cost of Being African American: How Wealth Perpetuates Inequality made a profound impression on me. I was shocked to learn that the wealth gap in America is much larger than the income gap. I wondered if similar research had been done about Hispanic people. I only found one or two papers on the wealth gap between Hispanic and non-Hispanic White Americans. So I made that the subject of my senior economics research project.

From that point on, I focused my research on how communities of color can build assets. Homeownership is the primary form of wealth accumulation in the United States. My passion for equity in building wealth led me to a series of engagements related to housing and homeownership: an internship at the Wisconsin Department of Commerce while pursuing my master’s degree in public policy; a stint working in both the public housing and community development divisions of the U.S. Department of Housing and Urban Development; a research assistant position at Harvard’s Joint Center for Housing Studies.

All this work helped me understand that equitable access to homeownership can play an important role in making wealth building more accessible. For most of us, the road to homeownership runs through the credit system. If you can’t secure a mortgage, you probably can’t buy a house.

So when I arrived at the San Francisco Fed as a senior researcher in Community Development and began studying access to credit and financial inclusion, this was in a way a continuation of my previous work. It turns out that people in immigrant communities and communities of color face very similar hurdles in getting small business loans, auto loans, and other types of credit as they do obtaining mortgages.

Rocio takes notes during an interview.

Barriers to the Financial System

A financial system that works for all Americans will help our country reach its full economic potential. Certain communities, including communities of color and low-income communities, lack equitable access to the traditional financial system.

Many barriers block access to financial services, including:

• Physical access. If you live in a “banking desert,” there may not be a single bank branch in your neighborhood. Without access to an in-person location, it can be difficult to open an account, deposit cash, cash a check, or troubleshoot any problems that come up. For instance, when I had trouble getting a credit card, I was able to resolve it by talking with a banker face to face. If I lived in a banking desert, I may not have had that option.
• Costs. Customers with less wealth on deposit tend to face higher account costs. Unstable income can also be a factor. For example, if you get paid irregularly, you may not have the number of direct deposits you need to avoid checking account fees, or you may get hit with overdraft fees. Recent research reveals that minimum balances and bank fees are among the top reasons people report being unbanked.
• Legacy of discrimination. Before fair lending laws, it was legal to deny credit, including mortgage loans, based on race or ethnicity. These unfair laws are gone, but they left us with a legacy of communities who don’t trust the financial system—or who don’t have experience in the financial system. If your parents or grandparents weren’t legally able to access credit, they won’t be able to pass down knowledge gained from that experience. This history of discrimination can also interact with other barriers—communities of color are more likely to be in bank deserts and account fees can be higher in communities of color—and consumers of color still sometimes face disparate treatment from employees of financial institutions.

How Inequity Persists Even After Homeownership

In my dissertation for my PhD in City and Regional Planning at UC Berkeley, I examined the differences in the neighborhoods where Hispanic and White home buyers purchase homes. A portion of this research was recently published in Cityscape and I enjoyed writing a piece on the topic for the SF Fed blog, “How Do Homeowner Experiences Vary by Race and Ethnicity? Neighborhood Differences between Hispanic and White Homebuyers.”

When scholars and policymakers talk about the benefits of homeownership in the United States, it is often discussed in the abstract. One component that’s frequently missing in these discussions: where is that homeownership taking place, and how does that shape the nature of the benefit to homeowners?

Some benefits of homeownership will be constant no matter where you buy, such as the stability that comes with a fixed-rate mortgage that, unlike rent, can’t be increased at the landlord’s will. But other benefits, such as the wealth building potential of homeownership, depend on your local market. If you were a homeowner in Detroit or Cleveland during the 2008 foreclosure crisis, those markets performed much worse than other parts of the country and haven’t recovered as much since. The Bay Area housing market, on the other hand, also declined during this time, but prices recovered much more quickly. Additionally, metro-level trends can mask variations happening at the neighborhood level.

Using mortgage data from the Home Mortgage Disclosure Act, I found that the communities in which Hispanic and White families are buying look quite different—even when the buyers have similar demographic profiles and are buying houses of the same value, with the same type and size of loans.

The data show that Hispanics are buying in neighborhoods with the following characteristics relative to Whites: fewer White residents, higher poverty rates, lower median incomes, and lower median home values. The neighborhoods are also more likely to have experienced economic decline over time.

These discoveries reveal that mere access to homeownership doesn’t eliminate inequities in housing. Factors that we may not yet understand or can’t easily measure—like discrimination or the ways in which social and knowledge networks affect how we choose our homes—persist in producing unequal outcomes.

Inequity in the Paycheck Protection Program

When it became clear that the COVID-19 pandemic was threatening the existence of millions of small businesses, Congress created the Paycheck Protection Program (PPP) to disperse conditionally forgivable loans to small firms.

I found a correlation between neighborhood income and PPP loans received. Many more of these loans went to high income areas, even when controlling for the number of businesses.

While this research couldn’t tease out the specific reasons for the disparity, researchers, policymakers, and small business advocates have hypothesized that this was an example of inequitable access to the financial system. For example, in the early stages of the program, many banks prioritized their existing customers. Businesses in the communities I study are more likely to be very small businesses—sole proprietors and those with only a few employees—as well as business owned by people of color, women, or immigrants. Entrepreneurs in all of these groups are less likely to have existing business banking relationships. So when the lending institutions, overwhelmed with applications, focused on existing customers, business owners without existing banking relationships were left out.

Can Fintech Improve Access to the Financial System?

Vice President of Community Development Bina Patel Shrimali and I co-edited an issue of the Bank’s Community Development Innovation Review exploring the potential for financial technology as a force for financial inclusion and equity for people of color. We partnered with our SF Fed Fintech team and the Aspen Institute to bring together a number of voices and experts in the field to explore whether fintech can undo some of the legacy of exclusion within the financial system, using new approaches to issues such as digital identity, analyzing credit worthiness, and practical access to services.

The article I co-authored for the issue, “The Racialized Roots of Financial Exclusion,” outlines inequities across multiple domains over time that brought us to the uneven access we have today and introduces the potential for financial technology to reduce barriers.

Another article in the issue, “The Next Frontier: Expanding Credit Inclusion with New Data and Analytical Techniques,” exposes the limits in traditional credit scoring, which contribute to financial exclusion. Credit reports generally draw on data that some people—especially people of color and those with low-to-moderate incomes—often don’t have, such as years of regular mortgage and credit card payments. In the same way that the barriers I listed earlier can keep someone from getting that first credit card, a lack of credit history may also keep potential homeowners from acquiring a mortgage. One exclusion leads to the next. The traditional financial system is limited in understanding other ways people may have established their potential as safe borrowers, such as years of on-time rent and utility payments or a healthy positive cash flow. Some fintech companies are looking to tap other data sources to produce alternative credit scores. Machine learning also may hold promise for predicting future borrower behaviors based on limited available data.

Public-Private Partnerships for Rebuilding Small Businesses

There are potential roles for the government and the private sector in growing small businesses’ access to credit. I recently completed a case study examining an innovative public-private partnership: the California Rebuilding Fund.

In 2020, when so many small businesses in California were struggling to stay afloat due to the pandemic—and as I found in my research, many were unable to secure PPP loans—community development financial institutions (CDFIs) realized they would need additional funds for lending to these businesses. But if these institutions had each raised funds individually for this effort, the scope would have been relatively limited.

Instead, the state of California partnered with CDFIs and private investors, allowing the CDFIs to draw on their experience working in low-income communities and communities of color to identify good candidates for small business loans and to process those loans. The CDFIs then transfer a majority of those loans to the Rebuilding Fund. The Fund repays the loan balance to the CDFI, enabling the CDFI to make another small business loan. This program is creating liquidity in a time and place where it is badly needed and facilitating more lending than these institutions would be able to do in the absence of the fund.

Another aspect of the California Rebuilding Fund is risk shifting: the state agreed to take the riskiest position for these loans. This allows the program to attract more private capital and to keep the costs very low for the small business borrowers.

My case study analyzes the components that went into this innovative approach to pooling capital and risk and how it could be successfully replicated to improve access to the financial system for more small businesses. It also explores the challenges exposed by this program, which future innovators could learn from.

In my two years at the Bank, I’ve been able to engage in a number of projects exploring how low-income communities and communities of color access credit, and how the financial system could be more inclusive. Whether I’m studying housing, credit, or something else, I always center my approach around how to increase and equalize access to the financial system.

Access to the banking system and other financial services is critical to building wealth and even to just living our daily lives to the fullest extent possible. As San Francisco Fed President Mary Daly has said, eliminating inequalities is fundamental to “an economy that’s sustainable and works for everyone.” I couldn’t agree more. And I remain committed to revealing and breaking down the barriers that restrict people from fully participating in our economy.

Rocio Sanchez-Moyano is a senior researcher in Community Development at the Federal Reserve Bank of San Francisco.

This essay first appeared on the San Francisco Fed’s Medium channel.

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The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.

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Workers in service industries and occupations with a lot of close social contact suffered the highest job losses during the pandemic recession. This differed from previous downturns, which tended to have their most severe effects on industries with high concentrations of manual labor. As a result, the unemployment impact of the pandemic on different demographic groups has not followed historical patterns, particularly for Asian, Black, and female workers. The unemployment gap between these racial groups has not been as wide as previous economic fluctuations would have predicted.

Demographic groups experience economic recessions and expansions differently. For example, Black and Hispanic workers as well as male workers have historically had the largest fluctuations in unemployment rates across the business cycle (Duzhak 2021).

The economic fallout from the COVID-19 pandemic caused widespread distress, with stay-at-home-orders and restrictions on businesses affecting many Americans’ mobility and ability to work. In the pandemic recession, the national unemployment rate jumped to a staggering 14.7% in April 2020, then quickly fell to 6.9% by October. It has declined more gradually since then, to 3.6% as of April 2022. The pandemic hit service industries particularly hard, causing an unprecedented number of layoffs. And while employment in service occupations has grown by over 7 million jobs since plummeting in April 2020, it is still 783,000 jobs short of pre-pandemic levels.

The pandemic created uniquely challenging economic circumstances for different demographic groups. In this Economic Letter, my analysis reveals that the pandemic recession’s impact on these groups has not followed historical patterns. The unemployment rate impact for Asian workers during the pandemic downturn was larger than expected. And while Black workers experienced the highest unemployment rate among racial and ethnic groups for much of the pandemic, the relative change in their unemployment rate was substantially smaller compared with previous recessions.

Pre-pandemic sensitivities

One way to understand how the variation in economic conditions affects demographic groups differently is to measure labor market sensitivity. It compares how the change in a group’s unemployment rate in response to a change in economic activity differs from that of the average worker. Following Duzhak (2021) and Aaronson et al. (2019), I measure this unemployment rate sensitivity as the response of each group relative to the change in the national average. A sensitivity higher than 1 indicates that, relative to the overall job market, a group experiences larger increases in unemployment during recessions or, conversely, greater declines in unemployment during economic booms.

Unemployment rates for Black and Hispanic workers, especially men, tend to be more sensitive to economic fluctuations. By contrast, unemployment rates for white, Asian, and female workers are usually less sensitive to changes in overall unemployment.

These group sensitivities are influenced by many factors, including age, level of education, and common jobs held. In particular, occupations that are traditionally more sensitive to economic fluctuations tend to rely more on manual labor and employ a larger share of Black and Hispanic workers, especially men (Duzhak 2021).

Is this time different?

Historically, Black workers have consistently had the highest unemployment rate of any racial or ethnic group, followed by the unemployment rates for Hispanic, white, and Asian workers. To examine whether the COVID-19 recession resulted in different unemployment dynamics, Figure 1 plots the actual and predicted unemployment rates for the two groups with the highest and lowest average unemployment rates, Black and Asian workers. Predicted values (dashed lines) show what would be expected for this recession given the historical patterns in the data; I calculate these using data on pre-pandemic sensitivities of each group available from January 2003 to February 2020.

Figure 1
Actual and predicted unemployment rates by race

Source: U.S. Bureau of Labor Statistics (BLS) and author’s calculations.

Figure 1 shows that before the pandemic, the predicted values closely followed actual unemployment rates for both groups. However, once the pandemic started, unemployment rates for Asian and Black workers followed quite different paths than historical patterns would suggest, with the rate for Black workers increasing less than predicted, while the rate for Asian workers climbed much higher than predicted. Predictions from the pre-pandemic experience suggested unemployment for both groups would have jumped approximately four times their February 2020 rates. In reality, the unemployment rate among Black workers climbed to only three times its starting point, while the actual unemployment rate among Asian workers spiked to nearly six times its February level. Comparison of the dashed and solid lines shows that the gap between the unemployment rates for the two groups widened less than predicted based on prior downturns.

To measure the impact of the pandemic across demographic groups, I estimate the change in each group’s labor market sensitivity during the 2020 downturn compared with pre-pandemic levels. The results are illustrated in Figure 2. A value of 0, shown by the vertical gray line, signifies no change in unemployment rate sensitivity during the pandemic. The figure shows that while the average sensitivity of white and Hispanic workers did not change significantly, the sensitivity of Black workers decreased 0.3 percentage points and the sensitivity of Asian workers increased almost 0.3 percentage points.

Figure 2
Changes in labor market sensitivities during the pandemic

Source: Author’s calculations based on BLS data.
Note: Zero equals no change in labor market sensitivity.

Comparing the results by gender in Figure 2 also shows that female workers in particular were adversely affected by the pandemic. Female labor market sensitivities (blue dots) increased by more than those for their male counterparts (red dots) in every group.

The role of occupation

To get a better understanding of what made the pandemic recession different, I break down the sample by occupation and gender to see if previous patterns held during this downturn. Historically, occupations play an important role in explaining different business cycle experiences among gender and racial groups. The occupations that tend to lose the greatest number of jobs during downturns include construction, production, and supply delivery. These jobs often require manual labor and employ more men than women.

To illustrate this, panel A of Figure 3 shows the evolution of employment for production and construction, the occupations that were impacted the most during the Great Recession of 2007–08. Panel B shows the same plot for personal care and food services, the most affected occupations during the COVID-19 pandemic. The figures track the change in employment relative to the beginning of each recession, indexing to 100 at the start.

Figure 3
Employment by occupation during the past two recessions

Source: Author’s calculations based on BLS data.

In the pandemic downturn, construction and production occupations have fared relatively well. An initial sharp drop of employment was short lived, with the construction industry recouping its losses by the summer of 2020. By comparison, the 2007–08 recession had a more gradual but long-lasting impact on production and construction jobs. During the first 15 months of the 2007–08 recession, employment levels shrank about 20% and recovered very slowly in the following years. Panel B shows that the biggest impact of pandemic-induced fluctuations was in food preparation and serving and personal care occupations, resulting in 4.39 million jobs lost. These jobs are typically in high-contact businesses, many of which had to close to mitigate the spread of the virus.

Estimating the changes in labor market sensitivity by occupation confirms these results. Food preparation and personal care occupations felt the biggest impact during the pandemic, nearly doubling their sensitivities compared with pre-pandemic levels. Construction and extraction together with farming, fishing and forestry occupations fared better than in the past, reducing their sensitivities by 0.6, and production jobs sensitivity dropped by 0.22.

Gender and racial disparities by occupation

Women’s labor market experiences during the COVID-19 downturn sharply contrasted with those during the Great Recession. Previously, their labor market sensitivities had been 0.33 lower on average than those for men, meaning that women’s jobs were better shielded from economic downturns. The pandemic narrowed the gap to 0.22. Childcare responsibilities lowered mothers’ labor market participation, weakening their employment recovery (Lofton, Petrosky-Nadeau, and Seitelman 2021). Moreover, compared with occupations that employ a higher share of men, service occupations that employ a higher proportion of women laid off more workers, which resulted in greater unemployment for women relative to men.

Food preparation and serving, one of the occupations hit the worst by the pandemic, employs disproportionately more Hispanic workers than other ethnic groups. However, the overall unemployment sensitivity for this group stayed largely unchanged because some of the job losses sustained by Hispanic workers in service occupations were offset by more favorable conditions in construction as well as farming and fishing and production occupations.

Asian workers previously had the lowest labor market sensitivity. The onset of the pandemic, however, pushed their unemployment rate to a level above that for white workers, unlike during the Great Recession. The high representation of Asian workers in personal care and food occupations resulted in this group having the highest percentage of temporary layoffs during the first nine months of the pandemic. This caused Asian workers’ overall unemployment sensitivity to increase. Using a shift-share analysis to break down the change in sensitivity suggests that about 50% of the change is due to shifts in occupation sensitivities. The disproportionate impact on the service sector made the experiences of Asian women especially difficult. At the same time, higher sensitivities imply that the unemployment rate of Asian workers should decrease faster relative to the national average as the economy recovers. In fact, Asian workers are the only group that have recovered their losses in the labor force since the start of the pandemic.

Black workers, particularly men and younger workers, showed lower-than-expected unemployment reactions to the fluctuations in the national labor market during the pandemic. This is partly because over 25% of Black men are employed in production, transportation, and material moving occupations, and those occupations fared better than the service sector. However, changes in occupational sensitivities during the pandemic do not seem to explain a substantial part of the change in their unemployment sensitivity. Another explanation is that Black workers lost a smaller percentage of jobs within these occupations relative to other demographic groups. In production and supply delivery, they not only recovered employment losses but even added jobs relative to the beginning of the pandemic. In the service sector, Black workers lost around 25% of jobs compared with 45% lost by Asian workers relative to the start of the recession. Therefore, while Black workers experienced high levels of unemployment overall, their labor market sensitivity has been substantially smaller compared with previous recessions.

Conclusion

The COVID-19 pandemic recession and recovery produced smaller differences in labor market experiences among demographic groups than did prior downturns. In particular, the racial gap did not widen as much as expected: relative to past patterns, Black workers had a smaller increase in unemployment, while Asian workers experienced a larger increase in unemployment. The differences in occupational compositions contributed to more adverse labor market conditions for Asian workers during the pandemic. The higher labor market sensitivity for Asian workers and the lower sensitivity for Black workers altered their recovery paths. Black workers faced a slower recovery, while Asian workers had faster improvements in labor market outcomes.

Evgeniya A. Duzhak is a regional policy economist in the Economic Research Department of the Federal Reserve Bank of San Francisco.

References

Aaronson, Stephanie R., Mary C. Daly, William Wascher, David W. Wilcox. 2019. “Okun Revisited: Who Benefits Most from a Strong Economy?” Brookings Papers on Economic Activity (Spring), pp. 333-404.

Duzhak, Evgeniya A. 2021. “How Do Business Cycles Affect Worker Groups Differently?” FRBSF Economic Letter 2021-25 (September 7).

Lofton, Olivia, Nicolas Petrosky-Nadeau, and Lily Seitelman. 2021. “Parental Participation in a Pandemic Labor Market.” FRBSF Economic Letter 2021-10 (April 5).

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Author(s): Karen Chapple, PhD, University of California, Berkeley and University of Toronto; Jackelyn Hwang, PhD, Stanford University; Jae Sik Jeon, PhD, Konkuk University; Iris Zhang, MA, Stanford University; Julia Greenberg, MPP, University of California, Berkeley; Bina Patel Shrimali, DrPH, Federal Reserve Bank of San Francisco

The San Francisco Bay Area is an extreme case of a constrained housing market, with job growth outpacing new housing production and resulting in supply shortages and price spikes that date back at least 30 years. The Bay Area’s structural shortage of housing that is affordable at all income levels affects the regional economy by increasing commuting and housing costs, which creates barriers to full economic participation, especially for lower income workers. An array of solutions have been considered, including subsidized housing production, affordable housing preservation, and tenant protection programs. However, there is little evaluation research available to inform which housing solutions will be most effective in stabilizing communities so that those who wish to stay are able to, even in the midst of an influx of newcomers.

This study seeks to fill this gap by examining the impacts of market-rate development, subsidized development, and tenant protections, including rent stabilization and just cause for evictions protections, on movers. Specifically, this study builds two unique and cross-validated datasets on mobility and links them to a bespoke block-level housing construction database. We use granular data on individual and household mobility to assess how specific housing interventions impact both direct and indirect displacement by looking at moves both out of and into neighborhoods with different characteristics in the nine-county San Francisco Bay Area.

Our research reveals that new market-rate construction in a neighborhood results in a slight increase in people of all income levels moving in and moving out, i.e., churn. The increase in rates of displacement (involuntary moves) for very low- to moderate-socio-economic groups is not as high as commonly feared, at 0.5% to 2% above normal rates. However, the highest socio-economic group disproportionately benefits from new market-rate housing production—they are the least likely to move out and the most likely to move into neighborhoods with new construction. We also find that rent stabilization and just cause eviction protections help residents of the lowest socio-economic status remain in their neighborhoods. At the same time, these protections may have exclusionary impacts as we find that fewer low-income people move into neighborhoods with tenant protections. Together, these findings suggest that equitable solutions to the housing crisis will require more than just upzoning and tenant protections—these are complementary solutions, but not enough. Preserving unsubsidized affordable housing and substantially expanding social housing would help mitigate displacement and exclusion while addressing the housing affordability crisis through market rate housing production and tenant protections. Social housing is the provision of rental or homeownership units affordable at a moderate income or below, and is run by a public or nonprofit entity. To work, it would need to be widely implemented, requiring government investment at levels that match the urgency of the housing crisis.

What follows is a short summary of the main findings of the study. Practitioner-oriented findings on the implications of new production, subsidized development, and tenant protections will be presented in a series of forthcoming policy briefs by the authors.

A Note on Methods

We use individual and household mobility and the type of neighborhood moved to (similar or downward) as proxies for displacement, or forced moves, and assess exclusionary displacement by examining who moves into neighborhoods following specific interventions. To measure displacement, we track the movements of individual households by income and financial stability levels in and out of neighborhoods, using two different proprietary datasets on individual and household characteristics: Infogroup and the Federal Reserve Bank of New York Consumer Credit Panel/Equifax data. We categorize residents into five socio-economic status (SES) groups: extremely low, very low-low, moderate-middle, middle-high, and high.

Impacts of Market-Rate Production

About 20% of Bay Area renters live in a block group with new housing. We find that when new market-rate housing is built, there is a slight increase in both people moving out of the neighborhood and people moving in (churn) across most socio-economic groups.

Opposite Effects on Lower SES Outmigration and High-SES Moving Out Rates

In particular, we find that new market-rate housing production slightly increases outmigration from the neighborhood for people of lower SES, and slightly decreases moving out for high-SES people.

For SES groups ranging from very low through moderate, 100 new market-rate housing units are associated with marginal increases in outmigration, ranging from 0.5 to 2% above normal rates in the first year after construction, generally declining from the second to fourth year. In other words, in a typical year, about 13 of every 100 moderate-SES households moves out, but with 100 new market-rate units in the neighborhood, about 15 move out.

The highest socio-economic status residents are slightly less likely to move out when new housing is built. Where 15 high socio-economic status households would have moved out without the new construction, 14 move out when 100 new units are built (a decrease in moving out rate of less than 1%).

Residents of extremely low and middle socio-economic status experience little change in moving out of their neighborhood.

Our model suggests that if 1,000 new units are built instead of 100, the impacts on inmigration and outmigration for all income groups would increase only very slightly; very low- to moderate-income groups would still experience increases in outmigration and inmigration of 1-2% in each subsequent year for four years when new market-rate construction occurs in their block group.

Increase in Inmigration

We find that that new market-rate housing production increases migration into neighborhoods throughout the Bay Area, for all socio-economic groups, though higher socioeconomic groups are more likely to move in compared to others.

For extremely low-SES households, inmigration is approximately one percentage point higher with the new construction of 100 market-rate units, so that 13 households would move in for every 12 that would move in without the construction.

Varying Effects on Gentrifying Neighborhoods

In the Bay Area’s gentrifying neighborhoods (neighborhoods with fast-rising incomes and an influx of high-income or highly-educated residents), new market-rate housing construction neither worsens nor eases rates of moving out, according to our study. It increases rates of people moving in across all socio-economic groups, particularly high-socio-economic residents.

Rates of people moving out remain the same in gentrifying areas for four years after construction of 100 units, with the exception of the highest socio-economic status residents; they are much more likely to move out (increasing from 22% to 31%). Middle socio-economic status residents are slightly less likely to move out.

Rates of people moving into a gentrifying area after new construction increases at first for all socio-economic groups, but by four years later goes back to normal for all groups except high-socio-economic status folks, who continue to move in at higher rates.

The slight impacts occur despite controlling for previous churn patterns, i.e., controlling for outmigration and inmigration rates in previous years.

Slight Increase in Constrained Moves

We find that market-rate housing construction is associated with a slightly higher chance of making a downward move—a move to a lower-opportunity neighborhood—for all socio-economic groups.

For every 100 new market-rate units built, residents who move out are slightly more likely (0.2 to 0.62 percentage points across SES groups) to move to neighborhoods with a lower median income or higher poverty rate (i.e., a “constrained move”).

Impact of Subsidized Development

There is too little subsidized housing construction to identify substantial impacts on displacement. Subsidized housing is effective at encouraging low-socio-economic status residents to move into neighborhoods, but effects do not last long after units are built.

Our findings on the insignificant impacts of subsidized housing construction on displacement are likely due to the lack of affordable units available for analysis. In addition, new subsidized housing units may be reserved for residents from outside the neighborhood, thus failing to mitigate local displacement effects.

Impacts of Tenant Protections

Rent Stabilization

Our analysis suggests that rent stabilization helps some—the lowest socio-economic status residents—to stay in a neighborhood. At the same time, it may be exclusionary as it discourages moving in for all socio-economic groups except moderate-middle socio-economic status.

• Rent stabilization decreases the probability of moving out for the lowest socio-economic status residents in our sample by about 1 percentage point.
• However, in gentrifying areas, rent stabilization has no significant effects on keeping very low socio-economic status residents in place.
• With an increase in units covered by rent stabilization in a neighborhood, all residents except those of moderate-middle socio-economic status experience declines in moving in.

These exclusionary impacts of rent stabilization are likely due to the lower numbers of available units, as tenant protections effectively reduce move-out rates by allowing renters to stay.

Just Cause Protections

Just cause protections help to keep the lowest socioeconomic status residents in place in gentrifying neighborhoods, where displacement pressures may be especially strong, according to our findings. However, these policies of course are limited to protecting existing residents and do not encourage residents to move in.

As more units are covered by tenant protections, we find that lower socio-economic status residents are not much more or less likely to move into neighborhoods, and high socio-economic status residents are less likely to move in.

We find that renters make fewer downward moves from tracts where more units are covered by just cause protections—suggesting people are able to make planned moves.

When there are more units covered by tenant protections (just cause for evictions and/or rent stabilization) in a census tract, renters in all income groups who move away from that tract are more likely to stay within the same city, less likely to move elsewhere in the Bay Area, and more likely to move outside of California. In other words, tenant protections shift migration patterns in two opposing ways, facilitating moves either nearby to their original homes or out of the state entirely.

Overall Impact of Interventions on Residential Mobility

Overall, new market-rate housing units are associated with a slight increase in both outmigration and inmigration from neighborhoods, i.e., more churn, for different income groups. Over the short-term, the net impact is minimal, suggesting a level of impact that is mitigable through policies to promote housing affordability. Tenant protections will also help to mitigate displacement but may increase exclusion (by decreasing inmigration to neighborhoods) for some low-socio-economic groups without being coupled with other tools.

Acquiring multi-unit rental properties that are at risk of becoming unaffordable via a program like San Francisco’s Small Sites Acquisition and Rehab Program may be an effective strategy. Other potential approaches include tenant or community opportunity to purchase policies such as San Francisco’s, transfer tax breaks for building owners when selling to a nonprofit or community land trust condominium conversion restrictions, and community land trusts. Considerations to address the housing affordability crisis and mitigate displacement and exclusion include the preservation of unsubsidized affordable housing, as well as initiatives that substantially expand social housing.

Disclaimer: The views expressed in this report are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System.

Download PDF (pdf, 16.93 mb)

Article Citation

Chapple, Karen, Jackelyn Hwang, Jae Sik Jeon, Iris Zhang, Julia Greenberg, and Bina P. Shrimali. 2022. “Housing Market Interventions and Residential Mobility in the San Francisco Bay Area.” Federal Reserve Bank of San Francisco Community Development Working Paper 2022-1. doi: 10.24148/cdwp2022-01

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SAN FRANCISCO–(BUSINESS WIRE)–CTBC Bank USA announced today that its President and CEO, Noor Menai, has been appointed as one of the new members of the Federal Reserve Bank of San Francisco’s Community Depository Institutions Advisory Council (CDIAC).

Additional CDIAC members, effective January 1, 2022, include Samuel D. Jimenez, CEO of 1st Capital Bank of Salinas, California; Patty Mongold, President and CEO of Mt. McKinley Bank in Fairbanks, Alaska; Harold Roundtree, CEO of UNCLE Credit Union in Livermore, California; and Stacy Watkins, President and CEO of Lexicon Bank of Las Vegas.

Noor Menai

Mr. Menai not only serves the Los Angeles community as President and CEO of CTBC Bank Corp. (USA), but is also Deputy Head of International Operations for CTBC’s holding company. He previously served as President and Chief Executive Officer at Charles Schwab Bank and as Managing Director at Citigroup’s Global Corporate & Investment Bank, in addition to several decades in retail banking at Citi, JP Morgan and Bank of America. Mr. Menai is a member of the Subcommittee on Modernization for the Federal Deposit Insurance Corporation and a board member for the USC Rossier School of Education and Children’s Hospital Los Angeles. He holds a bachelor’s degree in economics, computer and information systems and a master’s degree in business administration in finance, computer and information systems from the University of Rochester.

Samuel D. Jimenez

Mr. Jimenez has served as Chief Executive Officer of 1st Capital Bank since April 2020. Previously, he was Executive Vice President and Chief Operating Officer of Bank of Commerce Holdings. Mr. Jimenez is a certified public accountant. He holds a Bachelor of Applied Science degree in Finance and Economics from California State University-Chico and a Master of Science degree in Personal Financial Planning from the College for Financial Planning.

Patty Mongold

Ms. Mongold, a life Alaskan, has worked at Mt. McKinley Bank since she was a teenager, having started as a teller and having worked in most areas of the bank. She was promoted to Bank President in 2014 and elected President, CEO and Chair of the Board in 2015. Ms. Mongold currently serves as Treasurer for three nonprofit organizations, Chairperson of another, and Secretary of a fourth.

Harold Rundbaum

Prior to serving as President and CEO of UNCLE Credit Union, Mr. Roundtree served as senior vice president of retail banking at Technology Credit Union in San Jose, California. Mr. Roundtree is Chairman of the Livermore Valley Chamber of Commerce, a member of the California Credit Union League’s Housing Committee, and Vice President of the African American Credit Union Coalition. He holds a Bachelor of Science in Business Administration from California State University and a Masters in Business Administration in Management from Golden Gate University.

Stacy Watkins

Ms. Watkins has served as President and CEO of Lexicon Bank since 2020. She has over 27 years of banking experience, including 24 years in management and 18 years in a regional leadership position. Driven by her dedication to community service, Ms. Watkins is a former executive director of Junior Achievement of Southern Nevada and currently serves as the Capital Campaign, Family Gifts Division. In addition, Stacy leads the Lexicon Bank Community Spotlight program, a monthly initiative that highlights local nonprofits making a difference in the Southern Nevada community and connects them with banking partners and customers to support their missions. She holds a bachelor’s degree in business administration and management from the University of Phoenix and a Business of Banking certificate from the Pacific Coast Banking School.

Janet Silveria, President and CEO of the Community Bank of Santa Maria in Santa Maria, California, a current member of the Twelfth District CDIAC, was reappointed as Chair of the Council for 2022 and will continue to serve as the San Francisco Fed’s representative to the national CDIAC .

The bank also announced that James J. Schlotfeldt, President and CEO of First Federal Savings & Loan of McMinnville, Oregon, and Mina R. Worthington, President and CEO of Solarity Credit Union of Yakima, Washington, have been re-elected to the Council .

Remaining CDIAC members include:

Brad Baldwin, President and CEO, First Utah Bank, Salt Lake City, Utah

Tamara Gurney, President and CEO, Mission Valley Bank, Sun Valley, California

Joanne Kim, President and CEO, Commonwealth Business Bank, Los Angeles, California

Eric Renaud, President and CEO, Pima Federal Credit Union, Tucson, Arizona

Established by the Board of Governors in 2010, the Community Depository Institutions Advisory Council is a group representing banks, savings institutions and credit unions of various sizes in the Twelfth District. The Council provides input to the Bank’s management on a variety of topics, including economic and banking conditions, regulatory policies, payment issues and other topics of interest to depositories in the community. The members usually have a term of office of three years.

About CTBC Bank Corp. (USA)

CTBC Bank USA is a trusted and established financial institution for business and personal customers. Founded in 1989 and headquartered in Los Angeles, CTBC Bank has offices in California, New Jersey and New York. The Bank’s operations include deposits, lending, credit cards, foreign exchange, letters of credit, wealth management, mobile and electronic banking services. Customers benefit from access to large banking resources paired with individual support and the tailor-made service of a small bank. Its parent company, CTBC Bank Co. Ltd., is backed by more than $180 billion in assets and is one of the largest banks in the world by capital. For more information about CTBC Bank, visit www.ctbcbankusa.com.

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WASHINGTON (CBS SF / AP) – As sky-high gas prices in the San Francisco Bay Area drive the average price in California to new heights, President Joe Biden on Tuesday ordered the release of 50 million barrels of oil from America’s strategic reserve to allocate the cut support gasoline and energy costs.

Biden’s action was in coordination with other major energy-consuming nations, including India, Great Britain and China.

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“Today we are embarking on a great effort to bring the price of oil down, an effort that will span the globe and eventually reach your corner gas station, God willing,” said President Biden. “I’ve worked hard in phone calls and meetings with overseas leaders and policymakers over the past few weeks to put together the building blocks for today’s global announcement. And while our joint actions won’t solve the problem of high gas prices overnight, it will make a difference. “

The move is aimed at global energy markets, but also at US voters who are struggling with higher inflation and rising prices ahead of Thanksgiving and winter vacation travel. Gasoline prices are around $ 3.40 per gallon, according to the American Automobile Association, more than 50% higher than a year ago.

In California, however, the average price is currently $ 4.71 a gallon, a decrease from last week’s record increase to more than $ 4.85 a gallon. In the Bay Area, gas prices have exceeded $ 5 a gallon in many areas.

According to the AAA, recent heavy rains in Northern California have curtailed production capacity, which then seeped into Southern California – exactly what happened in Louisiana with Hurricane Ida.

The Biden announcement comes as some people prepare to travel considerable distances to see loved ones for Thanksgiving. While gasoline prices of nearly $ 5 per gallon make car trips more expensive, they also affect people’s daily lives and monthly budgets.

“I think anyone who comes to the gas station doesn’t really want to be here,” said Steven Mangano of San Jose as he pumped gas at a Chevron gas station in South Bay.

Laura Esparza from San Jose filled her tank on the way to work. It takes more than $ 100 to fill it up. If she does this at least twice a week, her wallet will be hit hard.

“I pump out gas more than once a week. I don’t have a small car, ”said Esparza. “With daily bills, rent, everything is so expensive, and now gasoline? It adds up. “

She hopes President Biden’s announcement to release oil from the strategic oil reserve will bring gas prices down here in the Bay Area.

“Lowering prices will help a lot,” says Esparza.

Patrick De Haan, Head of Petroleum Analysis at Gas Buddy, says drivers will soon be able to see the difference.

“Right now we could see relief that could reach or exceed 25 cents a gallon by Christmas,” De Haan said

An estimated 53 million people will be driving to their destination on Thanksgiving, with even more planning to drive on vacation in December.

According to Gas Buddy, there are some deals out there when you’re ready to drive a few miles.

The government will begin putting barrels on the market in mid to late December. However, the action is unlikely to cut gasoline prices significantly right away as families go on vacation. Gasoline usually has a delay in responding to changes in oil prices, and administrative officials suggested that this is one of several steps that can ultimately be taken to bring costs down.

Oil prices had fallen in the days leading up to the announced redemptions, a sign that investors were anticipating moves that could add 70 to 80 million barrels of oil to world markets. But in Tuesday morning trading, prices shot up almost 2% instead of falling.

The market was expecting the news and traders may have been overwhelmed when they saw the details, said Claudio Galimberti, senior vice president of oil markets at Rystad Energy.

“The problem is that everyone knows this measure is temporary,” said Galimberti. “So once it stops, if demand continues to outpace supply, as it is now, you are back in first place.”

Shortly after the US announcement, India announced it would release 5 million barrels from its strategic reserves. And the UK government has confirmed it will release up to 1.5 million barrels from its inventory. Japan and South Korea are also participating. Government officials say it is the largest coordinated release from global strategic reserves.

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Prime Minister Boris Johnson spokesman Max Blain said it was “a sensible and measured move in support of global markets” during the pandemic recovery. Blain added that UK businesses will be authorized, but not compelled, to participate in the release.

The actions of the US and others also risk counter-movements by the Gulf states, especially Saudi Arabia, and Russia. Saudi Arabia and other Gulf states have made it clear that they want to control supply in order to keep prices high for the time being.

As an impending joint release of US and other countries’ reserves has spread in the past few days, there have been warnings from OPEC interests that these countries may react on their part and break their promises to increase supplies in the coming months.

Biden has sought to reshape much of his economic agenda around inflation, saying his recently passed $ 1 trillion infrastructure package will ease price pressures by making the transportation of goods more efficient and cheaper.

Republican lawmakers hammered the government for inflation to hit a 31-year high in October. The consumer price index rose by 6.2% compared to the previous year – the largest twelve-month jump since 1990.

Senate Republican Chairman Mitch McConnell stormed the White House in a speech last week saying the victims of the higher prices were middle-class Americans.

“The three biggest drivers of the staggering 6.2% inflation we recorded last month were housing, transportation and food,” said the Kentucky Senator. “This is not a luxury, but the essentials, and from the middle class onwards they take up a much larger part of the family budget.”

The Strategic Petroleum Reserve is an emergency repository to secure access to oil in the event of natural disasters, national security issues, and other incidents. The reserves, managed by the Department of Energy, are stored in caves created in salt domes along the Gulf coasts of Texas and Louisiana. There are around 605 million barrels of oil in the reserve.

“With an unprecedented global economic downturn behind us, oil supplies have not kept pace with demand, forcing working families and businesses to pay the price,” Energy Secretary Jennifer Granholm said in a statement. “This move underscores the President’s commitment to using the tools available to cut costs for working families and continue our economic recovery.”

The Biden government has argued that the reserve is the right tool to help alleviate the supply problem. According to the Energy Information Administration, Americans consumed an average of 20.7 million barrels a day in September. This means that the release equates to approximately two and a half days of additional supply.

The pandemic has shaken the energy markets. When closings began in April 2020, demand collapsed and oil futures prices turned negative. Energy traders didn’t want to get stuck with crude oil they couldn’t store. But as the economy recovered, prices jumped to a seven-year high in October.

US production has not recovered. Energy Information Administration figures show domestic production averages around 11 million barrels daily, up from 12.8 million barrels before the pandemic began.

Republicans have also seized Biden’s efforts to minimize drilling and promote renewables as the reason for the decreased production, although several market dynamics are at play as fossil fuel prices are higher around the world.

Meanwhile, Biden and government officials insist that unlocking more oil from the reserves does not run counter to the president’s long-term climate goals, as it is a short-term solution to a specific problem, while climate policy is a long-term answer for decades.

They argue that the US’s dependence on fossil fuels will ultimately be less as they push to promote renewable energy. But that’s a politically convenient argument – in simple terms, higher prices reduce consumption, and significantly higher gasoline prices could force Americans to become less dependent on fossil fuels.

“The only long-term solution to rising gas prices is to continue our march to end our dependence on fossil fuels and create a resilient green energy economy,” said Democratic Senate Chairman Chuck Schumer in support of the release.

The White House decision comes after weeks of diplomatic negotiations. In their virtual meeting earlier this month, Biden and President Xi Jinping of China spoke about steps to tackle oil scarcity and “discussed the importance of measures to combat global energy supplies,” according to the White House.

The US Department of Energy will provide oil from the Strategic Petroleum Reserve in two ways; 32 million barrels will be released over the next few months and will return to the reserve in the coming years, the White House said. Another 18 million barrels will be part of a Congress-approved oil sale.

White House press secretary Jen Psaki said Monday night the White House will keep an eye on oil companies that have “made record profits” and watch out for price gouging “when there is a supply of oil or the price of oil goes down and the price of gas goes down does not sink. “

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© Copyright 2021 CBS Broadcasting Inc. All rights reserved. The Associated Press contributed to this report.

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