The US economic recovery “remains uneven and far from complete,” Federal Reserve Chairman Jerome Powell told a committee of American senators on Tuesday.
In his semiannual update on monetary policy, the first presented under Joe Biden’s presidency, Powell indicated that the Federal Reserve would not change monetary policy anytime soon, given the slow recovery of the labor market.
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 crisis did not fall equally on all Americans, and the least able to bear the burden were the hardest hit,” said Powell.
“Job losses were heavily concentrated in public jobs in the service sector. These tend to be more inclined towards lower wages and, in many cases, to minorities and women. “
He noted that job losses appear to be “somehow targeted precisely at these people, and we are well aware of that”.
The president echoed concerns raised by Treasury Secretary Janet Yellen that labor participation rates are lower than pre-pandemic levels.
Both economists said the official 6.3% unemployment rate is deceptively low, as so many Americans are not actively seeking work and are therefore not counted in the official unemployment rate.
“The unemployment rates published during Covid dramatically underestimated the deteriorating labor market,” Powell said in a statement. comments made earlier this month, remembering that the unemployment rate that accounts for those who are not looking for work would be closer to 10%.
Speaking at an event on Monday, Yellen said that 10 million Americans are officially considered unemployed, while another 4 million have left the workforce. Mothers working with young children saw a particularly sharp drop in labor participation during the course of the pandemic, according to a recent report of the Federal Reserve of Minneapolis.
During Powell’s testimony, Republicans pressured the president to address his concerns that Biden’s $ 1.9 trillion economic stimulus flat, which Democrats are trying to pass in Congress this week, will lead to high inflation. Powell, as he has done in recent weeks, has minimized his concerns about the aid that is causing inflation.
“This is not a problem at this point, as far as I can imagine,” said Powell, noting that the Federal Reserve has tools to challenge rising inflation rates, if seen.
Powell emphasized that the main priority for reviving the economy must be to continue vaccination efforts, which “offer hope for a return to the most normal conditions this year.”
The president is due to testify again tomorrow before the Chamber’s financial services committee.