As the Federal Reserve Bank cautiously guides the economy through a time of uncertainty at the federal level, officials are relatively optimistic about the nation’s, and the region’s, economic trajectory.

The economy is growing at an above trend rate, which is tightening the labor market and should eventually bolster wage growth, William Dudley, president of the Federal Reserve Bank of New York, said this week in Syracuse. With a tight labor supply, businesses are incentivized to invest in labor-saving technologies, he said.

He expects inflation will rise and stabilize around the Federal Open Market Committee’s 2 percent objective, and that the Fed will likely continue to gradually remove monetary policy accommodation, or economy boosting measures that loosen the overall money supply, he said.

Federal Reserve Chair Janet Yellen recently acknowledged that the Fed may have overestimated inflation growth, saying that the labor market may not be as tight as it appears, among other reasons. Though unemployment is relatively low — at 4.4 percent — there are still many workers in their prime without jobs or those in part-time jobs who want to work full time, she said. This could mean there’s more “slack” in the labor market that’s keeping wages contained.

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In the central and western New York region, job growth is running at about half the national pace, said Dudley. With a decrease in manufacturing jobs and the forces of technology and globalization, the region has had trouble keeping up with the changes, he said. The bright side is that jobs in other sectors, like education, healthcare and business services, has been picking up, and there are promising new startups coming into play.

The biggest challenge on that front?

“The skill requirements for virtually all jobs are increasing, and workers will need to rise to the occasion to thrive in today’s economy,” said Dudley. “The challenge facing all of us is how to best help workers develop the skills necessary to land a good job, and how to enhance those skills over time as work requirements evolve.”

Dudley was in the Rochester area Tuesday, and the Democrat and Chronicle sat down with him for a brief interview at Monroe Community College.

A Q&A with William Dudley, Federal Reserve Bank of New York

What is your overall outlook on the Rochester economy, and how does that fit into the context of the economic outlook across the region and the state?

The good news is that the region is growing. The bad news is the growth is not as strong as the country as a whole. Some of the areas have some comparative advantages that they’re able to build on — photonics here in Rochester is a good example. But there are more difficult problems that do need to be addressed. Especially in Rochester, it’s the unequal access to the economy.

There’s a lot of disparity between access to credit and also credit stress — in other words, if you get credit, how do you actually perform? I think it underscores the fact that there’s a lot of work to be done in Rochester to help people who are more disadvantaged. The good news is that there are a lot of initiatives in place. The Rochester-Monroe Anti-Poverty Initiative is a good starting point, but it’s going to take a lot of sustained effort.

What is the state of workforce development in this region? What are the challenges?

We talk about the 3 P’s — partnerships, programming and placement. The partnership is between the educational community and businesses; programming is developing things that can actually bring students in to give them the skills that they need that match the jobs that are available; and then actually getting them placed in those jobs.

There’s a lot of other barriers to getting people employed in good jobs. One is, for example, transportation — how do I get from where I live to where those jobs are actually located? Another is child care. It’s nice for you to say that I should do this job, but how do I handle the fact that I have some preschool kids that I have to take care of?

I think people are now understanding that this is a pretty complex set of problems, and there’s no silver bullet.

Where does the Rochester region fall in addressing these issues?

The conversation has shifted from just working on this little area or this little area, to more thinking of the whole thing as an ecosystem.

What you have to do is take all these various different initiatives in all these different spaces and say, ‘how do you actually coordinate this?’

I think that’s still in its early days. How do we actually align with one another? That’s the challenging part. We understand where we need to go, but it’s going to take a lot of work to actually get there.

How are we doing in the job market?

We're lagging behind, but growing. My view is, things are actually better than they were five or 10 years ago … one, because the economy as a whole is better, and two, I think the psychology is better.

Rather than thinking about how awful it is that all these bad things happened to us — we’re in Rochester, so (some think of) Xerox or Eastman Kodak — they’re sort of no longer focusing on that. They’re focusing on, ‘What are our comparative advantages, and how do we move forward?’

I think that change in psychology is really important, because your chances of succeeding go up dramatically if you actually think you can actually be successful.

Can the regional economy sustain a shift from the “Big Three” to a diverse ecosystem of smaller to mid-size companies?

Those companies had a lot of technical expertise in their workforces and a lot of that workforce is still here, and that creates a core for the next generation. That’s one of the comparative advantages in Rochester. You have a portion of your workforce who are very highly skilled with very strong technical knowledge, and you have enough of those people to actually make this an attractive place for companies to locate that are trying to develop these technologies.

STADDEO@Gannett.com