Fed Chair Powell says full economic recovery depends on managing COVID-19
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The Federal Reserve came out with its latest assessment of the U.S. economy. The Fed’s interest rate setting committee met yesterday and, as expected, decided to keep rates pandemic low, near zero.
Marketplace’s Nancy Marshall Genzer was at the Fed news conference. The following is an edited transcript of her conversation about it with “Marketplace Morning Report” host David Brancaccio.
David Brancaccio: What did you hear from Fed Chair Jerome Powell?
Nancy Marshall-Genzer: His main message was that the recovery depends on well we manage the coronavirus. He said if people can keep social distancing and wearing masks, that will help get the economy back to full strength. Powell also said the Fed won’t lose sight of the the millions of people who remain out of work. And he said he recognizes the economic downturn isn’t falling equally on everyone.
Brancaccio: Did Powell have new ideas to help those who’ve lost their jobs?
Marshall-Genzer: Remember, David, the Fed doesn’t have the tools to directly help people who’ve lost their jobs. It makes loans, not grants. And Powell repeated what we’ve heard several times over the past few months: Congress needs to pass another relief package.
Jerome Powell: I think we’ll have a stronger recovery if we can just get at least some more fiscal support when it’s appropriate — when it’s appropriate and the size that Congress thinks is appropriate.
Brancaccio: Did Powell have any predictions for economic growth the rest of this year?
Marshall-Genzer: He said the economy is still growing, but not like it was in May and June. He called the job gains in the spring “outsize.” But again Powell came back to the virus. He said it’s a big headwind for the economy right now. He also cited the risk that households will run through what’s left of their savings and pull back on spending.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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