Powell Pledges to Maintain Economic Support: Live Updates
transcript
transcript
Powell Testifies About Pandemic Economic Recovery Efforts
On Tuesday, Jerome H. Powell, the Federal Reserve chair, testified to lawmakers on the economic rebound from the pandemic recession and the threat of future inflation.
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We’ve taken forceful actions to provide support and stability to ensure that the recovery will be as strong as possible, and to limit lasting damage to households, businesses and communities. The path of the economy continues to depend significantly on the course of the virus and the measures undertaken to control its spread. A resurgence in Covid-19 cases, hospitalizations and deaths in recent months is causing great hardship for millions of Americans, and is weighing on economic activity and job creation. Following a sharp rebound in economic activity last summer, momentum slowed substantially with the weakness concentrated in the sectors most adversely affected by the resurgence of the virus. In recent weeks, the number of new cases and hospitalizations has been falling, and ongoing vaccinations offer hope for a return to more normal conditions. Household spending on services remains low, especially in sectors that typically require people to gather closely, including leisure and hospitality. In contrast, household spending on goods picked up encouragingly in January after moderating late last year. The housing sector has more than fully recovered from the downturn, while business investment and manufacturing production have also picked up. We’ve all been living in a world for a quarter of a century or more where all of the pressures were disinflationary. You know, pushing downward on inflation. We’ve averaged less than 2 percent inflation for more than the last 25 years. Inflation dynamics do change over time, but they don’t change on a dime. And so we don’t really think how — see how a burst of fiscal support or spending that’s not, that doesn’t last for many years would actually change those inflation dynamics. You ask about the U.S. economy and the world economy, I do think, and many forecasters agree, that once we get this pandemic under control, you know, we could be getting through this work much more quickly than we had feared, and that would be terrific. But it’s not done yet. The job is not done.
Jerome H. Powell, the chair of the Federal Reserve, told lawmakers that the economic rebound from the pandemic recession had further to go and reiterated that the central bank planned to keep up its growth-stoking policies, which include rock-bottom interest rates and large-scale bond buying.
“The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain,” Mr. Powell said in prepared remarks he delivered to the Senate Banking Committee on Tuesday. “Although there has been much progress in the labor market since the spring, millions of Americans remain out of work.”
Unemployment has come down sharply after surging last year, but the official jobless rate remains at nearly double its February 2020 level and probably understates the extent of weakness in the labor market. Likewise, consumer spending has bounced back but the service sector remains subdued.
The Fed slashed interest rates to near-zero last March and is buying about $120 billion in government-backed bonds each month, policies aimed at fueling lending and spending. Congress and the White House have also provided support in the form of enormous spending packages, and Democrats are now pushing for another $1.9 trillion in relief for workers and businesses.
Some economists have warned that inflation could take off as vaccines allow consumer activity to pick up and as the government pumps money into the…
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