Fed Powell: US economy at a “turning point” – CBS “60 minutes”

(Reuters) -The US economy is at a “turning point” with expectations that growth and recruitment will increase in the coming months, but some risks remain, in particular any resurgence of the coronavirus pandemic , said Jerome Powell, chairman of the Federal Reserve.

In a brief preview of a longer interview with the CBS news program “60 Minutes” that aired in full on Sunday night, Powell echoed both his recent optimism about the economy as a well-known warning that COVID-19 remains the main risk.

“We feel that we are in a place where the economy is about to start growing much faster and job creation will come much faster, so the main risk to our economy right now is that disease spread again, ”Powell said. “It will be smart if people can continue to socially distance themselves and wear masks.”

In fact, recent data on the economy has been largely positive, with 916,000 more jobs than expected created in March and some Fed officials suggesting that a million new jobs could be run in the US. but later this year.

Although there has been a rise in COVID-19 cases in the pockets of the United States – in Michigan in particular – infection rates in much of the country have been low for several months, and vaccines continue to be launched. with a day record of 4.6. million doses given on Saturday, according to a Reuters tracker.

This has allowed wide stretches of economy to be reopened more completely. Activity in the most affected leisure and entertainment sectors has increased significantly in recent weeks as consumers regain confidence to resume meals and jumps on planes.

However, even with the large increase in employment in March, the labor market remains 8.4 million jobs below where it was in February 2020, just before the pandemic triggered a recession. historical and, even further, where the level of employment would have never occurred a pandemic.

The rebound has also been uneven. The unemployment rate is 6% nationally, but it is 9.6% for blacks and 7.9% for Hispanics versus 5.4% for whites and 8.2% for those without a baccalaureate degree compared to 3.7% for those with university degrees.

That’s why Powell and his Fed policymakers have repeatedly promised not to soon give up the massive support they provide to the economy through near-zero interest rates and $ 120 billion a month in bond purchases.

Last year, they committed to a new operating framework that would bring the US labor market back to a “maximum” level of employment as a key element of its two goals mandated by Congress. The other is price stability or keeping inflation in line with its 2% year-on-year target.

The new framework is based on bonuses so that inflation can exceed this level for a time without intervening to curb it, measures that usually involve the imposition of more restrictive conditions that would likely slow down activity and recruitment.

But its commitment to that promise will be put to the test in the coming months with data likely to show rising inflation, especially when levels were measured a year ago, when the first days of the pandemic crushed demand and consumer prices.

However, Powell said Thursday that the central bank is doing nothing to reduce its support for the economy and that the next rise in inflation readings is likely to be transitory. And, as in his “60 Minutes” interview, he said the virus continues to rule the outlook.

“If you listen very closely to what she said,‘ we are in a place where we will begin to see, we will begin to see. ’And then she also warns against a rise in the virus,” the president of the U.S. House of Representatives said. Nancy Pelosi, on CBS’s “Face the Nation” immediately after showing the preview of Powell’s interview. “If we’re going to grow the economy with confidence, we have to crush the virus. They’re definitely related.”