Speaking at an online event at the Economic Club of New York on Wednesday, Powell was pessimistic about the employment situation in the U.S. and said continued strong policy support is needed to address the many problems workers still face.
Powell said addressing employment issues will require patient and accommodative monetary policy, given the benefits low interest rates have brought to the labor market. Although the economy has saved more than 12 million jobs since the new crown Epidemic, he said the U.S. economic recovery still has “a long way to go” in terms of the job market.
In his message, he said he fully recognizes the benefits of a strong labor market that will be supported by near-term policies and sustained long-term investments so that all job seekers have the skills and opportunities that will enable them to contribute to the economy and share in the benefits of economic prosperity.
Powell said that although the U.S. unemployment rate has fallen to 6.3 percent from last year’s epidemic high of 14.8 percent, nonfarm payrolls rose by only 49,000 in January and fell by 227,000 in December. more than 10 million Americans remain unemployed, a figure 4.4 million higher than before the epidemic last February. The overall unemployment rate “grossly underestimates” the true damage caused by the epidemic.
He added that without the misclassification that has plagued the Labor Department since the outbreak last March, the U.S. unemployment rate would be closer to 10 percent. He also noted that the impact of the epidemic on low-income people was particularly severe, with employment at the bottom of the population falling by 17 percent, while employment at the top fell by only 4 percent.
Powell stressed that despite the surprising speed of the early economic recovery, the U.S. is still a long way from a full recovery in the labor market. However, Powell also said he is confident that the Fed’s new Inflation framework will lead to better results, but monetary policy alone will not solve all the problems.
Given the number of unemployed and the likelihood that some people will still have difficulty finding work in the post-epidemic economy, he said, maximizing and maintaining employment will require more than supportive monetary policy. It will require a community-wide effort and support from both government and the private sector.
Powell added that mass vaccinations, as well as government fiscal programs, would help.
He reiterated the importance of keeping interest rates at the current near-zero level until the economy reaches maximum employment and inflation rises to 2 percent and will moderately exceed that level for some Time. Also reiterated that the current pace of bond purchases will continue until maximum employment is achieved and price stability makes substantial progress.
Powell said that achieving maximum employment will require more than just supportive monetary policy, but also payments from the government and private sector.
For this statement, analysts pointed out that Powell’s words are intended to support the Biden administration hopes to launch a massive fiscal stimulus of $ 1.9 trillion, his implication is that monetary policy to support the economy is not enough, a full recovery of employment will require more government assistance.
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