Powell Says Economy Making Real Progress, But Not for Everyone
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Federal Reserve Chair Jerome Powell said that while the U.S. economic recovery is “making real progress,” the gains have been uneven following a downturn that cut hard along lines of race and income.
“The economic outlook here in the United States has clearly brightened,” Powell said Monday in remarks before the National Community Reinvestment Coalition. Still, “it has been slower for those in lower paid jobs,” he said.
The Fed chair noted that almost 20% of workers in the lowest earnings rung were still unemployed after a year in February. That compares with just 6% for the highest-paid workers.
Powell has repeatedly said during the pandemic that the burden of the recession has fallen hardest on those least able to afford it, especially lower-income workers in service-sector jobs. Despite average monthly payroll gains of 539,000 in the first three months of 2021, payroll employment is still 8.4 million jobs below its pre-pandemic level.
Part of his speech to NCRC was a preview of the Survey of Household Economics and Decisionmaking, or SHED, which will be released later this month.
“Our upcoming SHED report notes that 22% of parents were either not working or working less because of disruptions to childcare or in-person schooling,” Powell said. “Black and Hispanic mothers -- 36% and 30%, respectively -- were disproportionately affected.”
Record U.S. stocks and a hot property market could fan wealth inequality. Nationally, housing prices are up about 12% as of February compared to the same month a year ago.
Powell, answering a question on housing after his speech, said “there is just a lot of demand,” partially fueled by low mortgage rates and fiscal stimulus that has helped boost household finances during the pandemic.
‘Very, Very High’
“It is harder for first time home buyers to get in,” Powell said. “It is going to be a tight housing market for some time now because demand is just very, very high.”
Central bankers have forecast that they expect to keep interest rates near zero through 2023.
They reiterated following a policy meeting last week that they would continue to buy $80 billion of U.S. Treasury securities and $40 billion of agency mortgage debt a month until “substantial further progress” has been made on inflation and employment.
New York Fed chief John Williams, in separate remarks on Monday, said he was optimistic but “we still have a long way to go to achieve a robust and full economic recovery,”
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