Amid bleak economic projections, Fed votes to keep interest rates near zero
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The Federal Reserve’s grim assessment of prospects for jobs and commerce in the age of COVID-19 sent stock futures plunging early Thursday. Federal Reserve Chair Jerome Powell said COVID-19 will cause long-term damage.
Marketplace’s Nancy Marshall-Genzer covered Powell’s news conference on Wednesday, and she spoke with “Marketplace Morning Report” host David Brancaccio to share the details.
The following is an edited transcript of their conversation.
Nancy Marshall-Genzer: The Fed voted unanimously Wednesday to keep interest rates right around zero. And it issued projections showing interest rates near zero through 2022. Powell said the lower unemployment rate reported for May was a “welcome surprise.” But he also said it was “heartbreaking” to see a slightly higher black unemployment rate, wiping out the gains in black employment we were starting to see.
David Brancaccio: And Powell was asked several times about inequality at yesterday’s briefing.
Nancy Marshall-Genzer: Right. I asked Powell about calls from some progressive economists for the Fed to pay more attention to the black unemployment rate and set a specific target for it. Powell said the Fed doesn’t “target” specific groups. That’s not part of its mandate from Congress.
But Powell said the Fed will try to keep overall unemployment low:
“And we will use our tools to support maximum employment and take that definition to heart. But obviously that’s something that will require an all of society, all of government response.”
Powell also said he’s concerned about the large numbers of Black people, Latinos and women who’ve lost their jobs during the pandemic. He pointed out that the rise in unemployment has been especially severe for them. And he wants to get their unemployment rates back down to where they were before the coronavirus crisis.
COVID-19 Economy FAQs
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
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