The U.S. economic recovery “remains uneven and far from complete,” Federal Reserve Chairman Jerome Powell told a committee of U.S. senators on Tuesday.
In his biannual update of monetary policy, his first delivered under Joe Biden’s presidency, Powell stated that the Federal Reserve would not soon change monetary policy given the slow recovery in the labor market.
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Powell told the Senate Banking Committee about his concern that millions of Americans are out of work, especially those who are already members of vulnerable communities.
“The economic downturn has not fallen the same on all Americans, and those least able to take on the burden are hardest hit,” Powell said.
“The job losses were highly concentrated on publicly turned jobs in the service sector. They tend to be more skewed towards lower paid and in many cases minorities and women. ”
He noted that job losses seem to be “somehow precisely targeted at these people, and we are well aware of that”.
The President reiterated the concern of State Secretary Janet Yellen that the labor force participation rate is lower than the pre-pandemic level.
Both economists have said that the official unemployment rate of 6.3% is misleadingly low considering that so many Americans do not actively seek work and thus are not counted in the official unemployment rate.
“The published unemployment figures under Covid have dramatically underestimated the deterioration in the labor market,” Powell said in remarks made earlier this month and noted that unemployment, which counts those not looking for work, would be closer to 10%.
Speaking at an event Monday, Yellen said that 10 million Americans are officially considered unemployed, while another 4 million have dropped out of the workforce. Working mothers of young children have seen a particularly sharp drop in work participation during the pandemic, according to a recent report from the Minneolis Federal Reserve.
During Powell’s testimony, Republicans pushed the President to address their concerns about Biden’s $ 1.9 tonne economic stimulus. level, which Democrats are trying to push through Congress this week, will lead to high inflation. As he has done in recent weeks, Powell downplayed their concerns about aid that triggered inflation.
“This is not a problem this time around, as close as I can count,” Powell said, noting that the Federal Reserve has the tools to challenge rising inflation should they be seen.
Powell stressed that the highest priority for economic recovery should be to continue vaccination efforts, which “give hope of returning to more normal conditions later in the year.”
The chairman is expected to testify again tomorrow before the House’s Financial Services Committee.
