Federal Reserve Bank's Dunn shares wealth of info with Chamber crowd

Few crowds in Pulaski County are as likely to want to talk business as those involved in the Somerset-Pulaski County Chamber of Commerce — and Julianne Dunn had plenty of info to share for the local business community.

Dunn is the Regional Executive for the Cincinnati branch of the Federal Reserve Bank of Cleveland, where she is responsible for managing relationships with regional stakeholders, monitoring the region’s economic environment, and contributing to the bank’s monetary policy mission, as well as managing for Business Advisory Councils for the bank.

At Tuesday’s Somerset-Pulaski County Chamber of Commerce membership luncheon at The Center for Rural Development, Dunn was this month’s featured speaker, and brought with her a wealth of information about the economic prospects for the nation and this region alike.

Before the luncheon, said Dunn — who clarified that her comments represented her views alone and not those of her employer — she and a colleague spent a “jam-packed couple of days” meeting with business and community leaders in Somerset. “It’s been really wonderful to get to know all of you, and we hope to be back again soon,” she said.

Dunn gave a crash course on the Federal Reserve System for those in attendance, a central bank for the country created in 1913, “at a time when there wasn’t a lot of confidence in the banking system.”

She observed that there are 12 Reserve banks that examine and supervise financial institutions, act as lenders of last resort, and provide U.S. payment system services, among other things. A board of governors, composed of seven members nominated by the President of the United States, guide all aspects of the operation of the Federal Reserve system and its key functions, and the board along with five Reserve bank presidents direct open market operations that set U.S. monetary policy with the Federal Open Market Committee.

“In what I like to call a uniquely American fashion, the framers of the central bank didn’t really like the idea of one institution with centralized power,” said Dunn. As such, a dozen regional reserve banks were set up across the country, stretching from San Francisco on the west coast to numerous major cities on the east coast, that Dunn called “quasi-private institutions” — Dunn’s Cleveland region covers the eastern part of Kentucky, while the western half of the state is in the St. Louis region.

Dunn said that the nation’s economy is “fairly solid at present, despite a lot of uncertainty.” She said that the last couple of years have seen “robust growth” in the economy, and growth of the Real GDP metric, or Gross Domestic Product. The years 2023 and 2024 saw “above-trend” growth, and the country came into 2025 on “really solid footing.” The first quarter of this year saw a slight decline, she observed; she related that to activity connected to tariff policy.

“There is an expectation from most forecasters that we’ll see a little bit of a slowdown in the second half of the year,” said Dunn, “and many of the business leaders that I talk to ... are starting to see some of that (occur).”

Based on information Dunn shared at the luncheon, bigger current contributors to Real GDP growth include residential and business fixed investments, household spending, and inventories, where net exports and government are negative factors.

“What we saw was a lot of people purchasing things from abroad, concerned about the fact that they might see tariffs on those goods, higher prices later on,” said Dunn. “Of course, (with) GDP, we’re trying to measure spending in the United States, so for purchasing products from abroad, that money is leaving us — that’s actually a negative on GDP. That ... kind of cancelled out what was relatively healthy spending by businesses and households.”

Dunn also talked about travelers making entry into the U.S., saying that border crossing activity, particularly from Canada, has declined “pretty significantly.” That shows up in tourism numbers, and here in Kentucky — “I’ve heard that there are many Canadians that really love the ‘Bourbon Trail,’ and so they’re not seeing quite that traffic,” said Dunn.

“All of this really combines to form weaker expectations from businesses in our region as well,” she added. However, a survey of businesses on expected conditions showed that “people are pretty evenly balanced in their expectations” and “it’s not super-negative.”

She added, “Many business leaders that I’ve spoken to kind of expect things to be okay in the coming months, but certainly not the kind of strong, robust growth we saw the last couple of years.”

Dunn illustrated unemployment rates over the last 20 years, for Pulaski County and Kentucky as well as the nation. There was a steady decline in unemployment after 2010, which spiked again dramatically in 2020 due to Covid-19 ramifications, but have since leveled off again — Pulaski at a 5.1 percent rate, Kentucky at 5.0 percent, and the U.S. at 4.2 percent.

“When you unpack that number and kind of look under the hood, things are a little bit more reassuring to me,” said Dunn. She said that the unemployment rate typically rises during a recession and can go up when people loses their job, but it can also rise when people actually enter the labor market, because they might not find a job right away.

The number of people looking for a job has indeed risen, but the number of people employed has also risen, “so as we see the unemployment rate rise, that’s not necessarily coming from job loss. Not to say that no one’s lost their job, there’s always a little bit of churn in the labor market, but really what that rise in unemployment rate is showing is an increase in the gap between (employment and the labor force). That kind of tells me there are people that are wanting to come back into the labor force.”

One key factor in more labor force entrants is because of migration. A map of individual Kentucky counties shows most counties with more people moving into the county than out; for Pulaski, those coming in represented 1.3 percent of the population last year.

The overall picture in Kentucky is that labor force growth has outpaced employment growth recently, leading to an increase in the unemployment rate.

Dunn also observed that inflation has come down “but the outlook is ... pretty murky,” and interest rates are expected to decline gradually but there is “significant uncertainty” around those projections.

Also at the luncheon Tuesday, Dr. Jeanette Parker, Campbellsville University Associate Vice President for Academic Affairs and Dean of Faculty presented a four-year scholarship award to Gunnar Coe, winner of this year’s Young Entrepreneur Academy program presented by the Chamber — Coe created a business to help the honeybee popular called Gunnar’s Sweet Queens. Additionally, Carolyn Sparks, CEO of Lake Cumberland Regional Hospital, presented a $1,500 scholarship a college of his choice to runner-up Jonah Collins, creator of JC’s Mobile Truck Wash.

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