Fed’s Powell: US Economy at a ‘Tipping Point’ – CBS ’60 Minutes’

(Reuters) -The US economy is at a “tipping point” with growth and hiring expected to accelerate in the coming months, but some risks remain, most notably a possible resurgence of the coronavirus pandemic, said Jerome Powell, chairman of the Federal Reserve.

In a brief preview of a longer interview with CBS ‘news magazine program’ 60 Minutes’ that aired in full on Sunday night, Powell reiterated both his recent optimism about the economy and a now-known warning that COVID-19 remains the greatest risk. .

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

Indeed, recent data on the economy is generally positive, with a better-than-expected 916,000 jobs created in March and some Fed officials suggesting that a million new jobs per month may be possible later this year.

While parts of the United States are seeing an increase in COVID-19 cases – particularly in Michigan – infection rates are at multi-month lows in much of the country, and vaccine roll-out continues at a rapid pace with a one-day high of 4 , 6 Million doses were given on Saturday, according to a Reuters tracker.

This has resulted in a full reopening of broad parts of the economy. Activity in the hardest hit leisure and entertainment sectors has surged significantly in recent weeks as consumers regain the confidence to eat out and jump on a plane.

Still, even with the great boom in employment in March, the labor market remains 8.4 million jobs short from where it was in February 2020, just before the pandemic triggered a historic downturn, and even further below where the employment level is now. would be. pandemic never happened.

The rebound was also uneven. The unemployment rate is 6% nationally, but is 9.6% for blacks and 7.9% for Hispanics versus 5.4% for whites, and 8.2% for those without a high school diploma versus 3.7% for those with a university degree.

That is why Powell and fellow Fed policymakers have repeatedly pledged not to stop anytime soon with the tremendous support they are providing the economy through near zero interest rates and $ 120 billion a month in bond purchases.

Last year, they committed to a new operational framework that places the recovery of the US labor market to a “maximum” level of employment as the primary objective of their two congressional goals. The other is price stability, ie keeping inflation broadly in line with their 2% annualized target.

The new framework provides allowances for inflation that exceeds that level for a period of time without intervening to rein in it, measures that typically impose more stringent conditions that are likely to slow down activity and hiring.

But their commitment to that promise will be put to the test in the coming months with data likely to show an increase in inflation, especially when compared to levels seen a year ago, when the early days of the pandemic increased consumer demand and the prices crushed along with it.

However, Powell said on Thursday that the central bank is far from diminishing its support for the economy and that the upcoming rebound in inflation data is likely to be transitory. And, as in his “60 Minutes” interview, he said the virus continues to rule outlook.

‘If you listen very carefully to what he said,’ we are in a place where we will start to see, we will start to see ‘. And then he also warns of an increase in the virus, ”said Nancy Pelosi, speaker of the US House of Representatives, on CBS” Face the Nation, “immediately after the preview of the Powell interview was shown. ‘If we want to grow the economy with confidence, we have to fight the virus. They are certainly related. “