In a speech at the New York Economic Club that day, Chairman Powell said, “The actual unemployment rate in the United States reaches 10%,” and said that he will continue to pursue monetary policy to save the economy. The unemployment rate in January, as revealed by the US Department of Labor, was 6.3%, but it was evaluated as not reflecting the actual reality.
“The decline in the labor force in the last 12 months has been the largest since 1948,” said Chairman Powell. “Considering this, the current unemployment rate headline was underestimated,” he argued.
The Fed has argued that it will not consider measures to curtail liquidity unless employment returns to pre-crisis and inflation returns to 2%. Chairman Powell reaffirmed that it will take a considerable amount of time for the labor market to recover, although some economic indicators have recently shown signs of recovery and the private sector is raising the growth rate forecast to 5-6% this year. Tapering (reduced liquidity supply through reduced asset purchases) and early interest rates were not possible, and the discussion was once again wedge.
“We need a patient monetary policy that embraces the lessons of the past,” said Powell.
Chairman Powell stressed that the employment situation is particularly difficult for the vulnerable.
Chairman Powell emphasized that “the lower 25% of the people’s employment fell 17% during the pandemic, while the top 25% of the class decreased only 4%.” He stressed that the policy goal is to ensure that full employment occurs throughout the class.
Chairman Powell said, “To solve job difficulties, active policy support will be needed.” He also emphasized that “the monetary policy alone cannot do everything,” and “the government and the private sector must unite the heap.”
Chairman Powell’s deliberate opinion on the job market has a temperature difference with that of US Treasury Secretary Janet Yellen who is optimistic.
Minister Yellen predicted that the US could return to full employment next year (about 4% of the pre-crisis unemployment rate) if the $1.9 trillion stimulus package passed through Congress on the 7th. Chairman Powell believes it will take several more years for employment to recover, but Yellen is very optimistic. Minister Yellen’s remarks at the time came in the context of emphasizing the need to pass stimulus packages, but the two are disagreeing about the resilience of the job market.
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