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Federal Reserve Chair Jerome Powell will testify before the Senate Banking Committee this week. Mark Makela/Getty Images
COVID-19

Fed Chair Powell to report to Congress on the COVID-19 economy

Nancy Marshall-Genzer Jun 16, 2020
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Federal Reserve Chair Jerome Powell will testify before the Senate Banking Committee this week. Mark Makela/Getty Images

Federal Reserve Chair Jerome Powell starts two days of congressional testimony Tuesday. He’ll appear, remotely, before the Senate Banking Committee later this morning. Powell will discuss the Fed’s monetary policy report — an overview of the economy the Fed presents to Congress twice a year. And he’s following up on dire predictions from last week’s Fed meeting.

Expect Powell to elaborate on his pessimistic forecast after last week’s Fed meeting when he pointed out that millions of people who have lost their jobs during the COVID-19 pandemic may not get those jobs back.

“The Fed’s projection is for unemployment at the end of this year to be 9.3%, which we all believe is a pretty grim outlook,” said Tim Duy, an economist at the University of Oregon.

The Fed is also predicting that gross domestic product — the country’s total economic output —will end the year down 6.5% from the fourth quarter of 2019. Frances Donald, global chief economist at Manulife Investment Management, expects Powell to urge Congress to pass another relief bill.

“My sense is that Chair Powell is really going to try to highlight and underline as much as he can that his policies alone are simply not enough,” Donald said.

Donald said Powell will emphasize that the economy won’t bounce back quickly, and we have a long road ahead.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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