Federal Reserve Chairman Jerome Powell says the economic outlook has “clearly brightened” in the United States but the recovery remains too uneven with lower income groups lagging behind.
In a speech Monday, Powell cited a number of reasons that U.S. growth prospects have brightened.
“We are not out of the woods yet, but I am glad to say that we are now making real progress,” Powell said in remarks to the National Community Reinvestment Coalition, citing rising vaccination levels, increased government support and more business re-openings across the country.
But he said, “The economic downturn has not fallen evenly on all Americans and those least able to bear the burden have been the hardest hit.”
Powell said new statistics showed that 20% of workers in the lowest one-fifth of workers by income did not have jobs in February of this year, one year after the pandemic hit. He said that compared to 6% of workers in the highest one-fifth of incomes who were still without work.
Powell said that labor force participation had declined 4 percentage points for Black and Hispanic women compared to 1 percentage point for white women and about 2 percentage points for all men.
Powell said the Fed was focused on these long-standing disparities because they weigh on the country’s productive capacity.
“We will only reach our full potential when everyone can contribute to, and share in, the benefits of prosperity,” Powell said.
Powell repeated the Fed’s pledge to use its power to control interest rates to keep rates at current ultra-low levels until it had achieved the goals of maximum employment and inflation rising for a time above the Fed’s 2% target, a goal the Fed has failed to achieve for the past two decades.
“We view maximum employment as a broad and inclusive goal,” Powell said. “Those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities. Our recent history highlights both the benefits of a strong economy and the severe costs of a weak one.”
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