What’s happening: The U.S. economy continues to fall by 9.5 million positions since February 2020, putting enormous pressure on the central bank to continue stimulus for the foreseeable future. Expect Powell to get strong at this point when the Fed announces its latest policy decision this week.
This gives the Fed much more room to keep interest rates lower for longer, and this is what many economists expect it to do.
“They’ve said they’re willing to have patience,” Joseph Brusuelas, chief economist at RSM US, told me.
The passage of President Joe Biden’s $ 1.9 trillion relief package could help. Airlines said last week that they were canceling progress and complementary unemployment benefits and stimulus controls are expected to increase demand, supporting employment in troubled industries.
“It just won’t get behind this particular legislation,” he said.
The package will not remove the economic scars. Many jobs in the hospitality, entertainment and retail sectors will never return. Harvard University researchers have found that the number of small start-ups continues to fall by 32% compared to January 2020. The Institute for Economic Policy, in examining the latest report on job vacancies from the Bureau of Labor Statistics , notes that for every 15 unemployed workers, there were only jobs available for 10 of them.
“That waiter will have to learn to code. This waitress will have to be digitally literate, as her jobs will probably not be in the first post-pandemic economy,” Brusuelas said.
The solution to this problem may lie in the hands of Congress and the Biden administration, given the limited tools available to the Fed. Treasury Secretary Janet Yellen has said there will be another bill that “addresses job creation through infrastructure development [and] by investing in people, education and training “.
Meanwhile, lawmakers will need the Fed to continue to provide support, even if inflation issues re-emerge in financial markets.
Why small grocery stores are (still) running out of toilet paper
If you have recently entered your independent and local grocery store, you are likely to still find a shortage of items such as toilet paper, paper towels, and cleaning items.
Without access to key products, say small supermarkets, they lose customers and face another hurdle as they try to survive against the big chains.
Not a whole new problem. Prior to the pandemic, independent supermarkets used to be told that they could not get particular products or items available on the big chains, according to Christopher Jones, senior vice president of government relations and advisor to the National Grocers Association.
“What has happened during the Covid pandemic is that this problem has spread,” Jones said.
There is no publicly available data for tracking out-of-stock products in small or large stores. But Burt Flickinger, a strategic consultant for Strategic Resource Group, said he and his team visit stores across the country each week and have found in the pandemic that “by far” store chains have better deals than stores independents.
Until next time
Monday: China’s retail sales, industrial production and unemployment rate
Tuesday: Retail sales and industrial production in the USA
Friday: Political decision of the Bank of Japan