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Illustration: Lazaro Gamio/Axios

The Federal Reserve said Wednesday it would use its might to shed light on the downbeat conditions plaguing rural America.

Why it matters: It's another example of the sea change among monetary policymakers, who are starting to consider issues they haven't focused on before — like the plight of people in low-income communities and climate change — as they make huge decisions about the economy.

Driving the news: The Richmond Fed, one of the central bank's 12 outposts around the country, hosted its first event focused on rural America, drawing local business leaders and local politicians.

  • The Richmond Fed’s district, which runs from Maryland through South Carolina, plus most of West Virginia, is comprised of rural towns that have higher unemployment rates than neighboring urban centers, as well as lower education levels and meager population gains after years of declines.

What they're saying: "We've invested significantly in trying to understand these issues from a research perspective," Thomas Barkin, who took over as head of the Richmond Fed last year, tells Axios.

  • "I personally have invested a lot in getting out in these markets and trying to bring the Federal Reserve to them ... and to try to understand what they're doing well and how we can publicize and spread that."

Between the lines: Wednesday's event took place after the release of dismal manufacturing data that spooked financial markets and resurfaced fears of a coming economic slowdown.

  • Barkin, who won‘t be part of the rotating group of officials who vote on rate decisions until 2021, told reporters on Wednesday he was watching whether or not the downbeat sentiment that's curtailed business investment is seeping into consumer confidence.

Even though the unemployment rate is near a 50-year low, prosperity hasn't reached residents of smaller towns. And while urbanites constitute a way bigger chunk of the U.S. population, rural residents still account for 1 in 5 Americans, per Fed research.

  • "When you do the analysis of who are the people on the sidelines [of the labor market] and who could come in, they are disproportionately in the rural markets," Barkin tells Axios.
  • "This stuff matters because if there are things that could be done to bring more rural, small-town residents [into the labor market], then that means we have job growth available still for a significant amount of time without an increase in wages and prices," says Barkin, noting the important tension for the Fed between inflation and low unemployment.

The big picture: Under the leadership of Jerome Powell, the Fed has hosted other gatheringsunprecedented until this year — to compile grassroots feedback on its longstanding ways of setting monetary policy.

  • Powell has mentioned these "Fed Listens" events when discussing the importance of keeping the economic boom going and when defending the Fed's hotly debated moves to cut interest rates.
  • And next month, as Axios scooped, the Fed is inviting researchers to San Francisco to lay out the economic impacts of climate change, which has never before been a focus for the central bank.

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