Following a “teaser” on the CBS Sunday morning show, “Face the Nation,” CBS aired Scott Pelley’s interview of Federal Reserve Chairman Jerome Powell on its Sunday evening “60 Minutes” program yesterday. During the interview, which took place the previous Wednesday, Powell discussed the current state of the economy, the aggressive monetary policy supported by the Fed, and his take on the U.S. economic outlook. He stated that “[w]e feel like we’re at a place where the economy is about to start growing more quickly and job creation coming in much more quickly.”
U.S. Economic Updates
“What we’re seeing now is really an economy that seems to be at an inflection point. And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support…The principal risk to our economy right now really is that the disease would spread again.” “There really are risks out there… and the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we’ll see another spike in cases.” “It’s going to be smart if people could continue to socially distance and wear masks,” Powell said.
On the economy, Powell stated that right now, the Dow Jones industrial average is at record levels, adding more than 900,000 jobs last month. Even so, COVID-19 cases continue to rise with millions of Americans still out of work, especially those of color and women. Powell said that the Fed should not pare back its support for the economy based on inflation expectations.
“I think we need to keep in mind, we’re not going to forget those people who were left on the beach really without jobs as this expansion continues,” Powell said. “We’re going to continue to support the economy until recovery is really complete.”
The Federal Reserve
Powell’s comments follow along the line of reports from the Fed’s meeting on Wednesday, April 7, where Fed officials continued to state that the economy will continue to require aggressive monetary policy support to recover from the pandemic. Based upon their most recent economic forecasts, the Fed will likely keep interest rates low well into 2023. The question remains whether the Fed will continue that approach if the economy gets too hot too quickly. The Fed’s thinking has been that they expect a spike in inflation but that it will be temporary. We’ll see if that’s the case over the coming months.
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