CSMGEP Profiles: Seth B. Carpenter:
The Buck Stops Here
Seth B. Carpenter, Chief Monetary and Reserve Analysis Section
Division of Monetary Affairs, Federal Reserve Board
Seth Carpenter loves French food and French wine; it's an affinity developed from summers spent in France as a child, the food that is, not the wine--presumably the taste for Burgundy came later. Either way, his experiences in France led him to consider a French literature major in college, with plans to live and study abroad. Once on campus, however, he decided otherwise. "I realized that I liked those frivolous things, like food and clothing." An introductory course during his freshman year gave him a nudge toward economics.
As an undergraduate, Carpenter says he found himself more and more interested in "thinking analytically and answering questions that didn't already have answers." The key to economics, he says, is "taking complex questions and paring them down to simple pieces that can be answered in a meaningful way." It is the search for a balance between complexity, too much of which prevents finding an answer, and simplicity, too much of which produces a meaningless answer, that guides his economic approach and fuels his passion.
Today, one question Carpenter answers daily is, "How much money should the Federal Reserve release to the economy to achieve its interest rate goal?" As Carpenter explains, "Like any other market, the cost of money is set by supply and demand. The Fed can affect the supply."
"Eight times a year the Fed committee meets and selects a target rate, and then they adjourn and head off to lunch. That's when we go to work." To hit the target, Carpenter and his staff convene at 9 a.m. each morning to forecast the daily demand for funds and the external factors that could affect the supply of reserves. "Then we discuss how much money there ought to be. If needed, and in concert with the Federal Reserve Board in New York, we adjust the markets and New York sets the wheels in motion. On a given day we may be deciding whether to add $6 billion or $6.5 billion to the market. We definitely sweat the details each and every morning because by the next morning, the interest rate tells us how good our forecasting was."
"It's a hectic few hours for us," he says. "If my Mom calls, I have to be a little abrupt and hang up quickly. Of course I then have to call back to apologize."
After the morning crunch, Carpenter rubs elbows in the cafeteria with Fed chief Ben Bernanke, his doctoral thesis advisor at Princeton. In retrospect, Carpenter says he would have developed the relationship with Bernanke earlier in his graduate work, to learn the "how's" of research.
"At the beginning of graduate school," he says, "I was happy to do my coursework, pass my exams, and take school one day at a time. The hard part for me was that I didn't have a mentor until my third year. When it became clear how important it was to work with someone, I tapped into an advisor and built up a relationship. In retrospect, it would have been better to establish from the beginning that I was a research economist and try to be involved in more research projects."
Carpenter's advice for aspiring economists of color is to attend the best school possible. "If someone is going to be skeptical of your abilities as an economist because of your race, he will think twice before dismissing you if you have a Ph.D. from MIT, Stanford, Princeton, or the like."
"At times," he says, "it is a bit uncomfortable being one of a very few black economists at the Board of Governors--you could count them on one hand and still snap your fingers--but most of the time I'm too busy to notice. As a professor, some students have reacted to me as a function of race, but I see these moments as an opportunity to teach, not just economics, but life."
The path from French and Law to Economics has been a gradual one for Carpenter. "There wasn't any watershed moment, the transition was very incremental over a long period of time." However it happened, Seth Carpenter is clearly thrilled to be where he is, doing what he does. "I find working for the Fed, promoting the economic well-being of Americans, a very rewarding job. I get to do research that I'm interested in, of course, but there is also a great sense of public service, one that is shared by many of my colleagues, and I value that highly."
Profile by Hiredpen, inc. www.hiredpenchicago.com
A salon and parlor game of the 19th century, made most famous by Marcel Proust's answers, the Proust Questionnaire (adapted here) gets to the heart of things....
Perfect day – A perfect day would start with a cappuccino and a walk with my dog. Then there would be a bike ride, a good read, and a nap. It would end with a dinner I cooked for my wife and friends; then the dishes would magically disappear.
Worst job – I loved all of my jobs including furniture salesman, ice cream shop clerk, bank teller, and mover.
Favorite indulgence – Red Burgundy. When a red from Burgundy is good, it's one of my favorite pleasures.
Most deplorable trait in others – Disrespect and mistreatment of fellow humans. Treating animals badly is right up there, too.
What's on your nightstand? – About six cookbooks.
Favorite movie – Casablanca
What's your favorite sport? – Cycling. I'm a dedicated ex-runner.
What's your worst habit? – Biting my fingernails--which is quite disgusting. I've quit about 15 times over the years.
If you weren't in economics, what would you want to do? – I'd be a professional chef of modern American cuisine--using classical (mostly French) cooking techniques with local ingredients. A bistro with interesting and creative, but not pretentious food.
What misconceptions do people have about economists? – Many people think that all economists are dull. That's simply not true. The fact is that almost all economists are dull.