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

(Reuters) – The US economy is at a “turning point” with expectations that growth and employment will increase in the coming months, but some risks remain, especially any recurrence of the coronavirus pandemic, said Federal Reserve Chairman Jerome Powell .

In a brief preview of a longer interview with CBS’s “60 Minutes,” which aired Sunday night, Powell recalled both his recent optimism about the economy and a familiar warning that COVID-19 remains the main risk. . .

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

Indeed, recent data on the economy has been largely positive, with 916,000 better-than-expected jobs created in March, and some Fed officials suggest a run of one million new jobs a month is possible later this year.

While the pockets of the United States are seeing an increase in COVID-19 cases – especially in Michigan – infection rates in most parts of the country are at minimum levels for several months, and the launch of the vaccine continues with a record of 4.6 days . million doses administered on Saturday, according to a Reuters tracker.

This has allowed large areas of the economy to fully reopen. Activity in the most affected leisure and entertainment sectors has increased significantly in recent weeks, as consumers regain confidence to resume meals and jump on planes.

However, even with the sharp rise in employment in March, the labor market remains 8.4 million jobs below the level it was in February 2020, even before the pandemic triggered a historic recession. and even beyond the level of employment the pandemic never occurred.

The comeback was also uneven. The unemployment rate is 6% nationally, but it is 9.6% for blacks and 7.9% for Hispanics, compared to 5.4% for whites, and 8.2% for those without a high school diploma, compared to 3.7% for those with higher education.

That’s why Powell and his Fed political colleagues have repeatedly promised that they will not soon give up the massive support they offer to the economy with almost zero interest and $ 120 billion a month in bond purchases.

Last year they engaged in a new operating framework that places the restoration of the US labor market at a “maximum” level of employment, as the most important goal of the two mandated congressional goals. The other is price stability or maintaining inflation broadly at the 2% target from one year to the next.

The new framework is based on quotas so that inflation exceeds that level for a period of time without them intervening to control it, measures that usually involve imposing more restrictive conditions that would probably slow down activity and employment.

But their commitment to this commitment will be tested in the coming months, with data likely to show rising inflation, especially when measured against levels a year ago, when the first days of the pandemic crushed demand and prices. consumers at the same time.

However, Powell said on Thursday that the central bank is far from reducing its support for the economy and that future inflation will likely be transitory. And, as in his “60-minute” interview, he said the virus continues to rule the outlook.

“If you listen very carefully to what he said, ‘we are in a place where we will begin to see, we will begin to see.’ And then it warns against the rise of the virus, “Nancy Pelosi, president of the US House of Representatives, told CBS’s” Face the Nation “immediately after the preview of the Powell interview was presented. “If we are to grow the economy with confidence, we must crush the virus. They are definitely related. ”