The Differential Impact of the Federal Reserve Rate Hikes on National and Regional Employment Figures: Evidence from San Joaquin County

Abstract

This study examines the relationship between Federal Reserve interest rate actions and the employment growth rate in one county within California’s San Joaquin Valley, an economically distressed rural area. Since 2016, the Federal Reserve implemented a series of interest rate hikes and a “quantitative tightening” process to reduce the size of its balance sheet. Our data show that this tightening did slow the rate of employment growth nationally, but the rate slowed more in California and still more in San Joaquin County. This vulnerable region paid a high price for the desired contraction of monetary policy.