Fed Chief Powell: Economy at a Turning Point

Fed chair discusses jobs, era of slow inflation, COVID in interview on '60 Minutes.'
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Federal Reserve Chairman Jerome Powell said Sunday that the U.S. economy is at a turning point, as vaccines and stimulus roll out and more Americans land jobs -- but that the nation isn't out of the woods yet.

"I would say this. What we're seeing now is really an economy that seems to be at an inflection point," said Powell on Sunday on "60 Minutes," according to a transcript.

The Fed chair discussed on "60 Minutes" the effectiveness of attempts by the Federal Reserve and Congress to offset the pandemic’s harm to workers and businesses, as well as inflation and other topics.

"It's just a very unusual recovery," said Powell. "There are really disparate outcomes within countries and between countries. And so in our country, what you're seeing is some parts of the economy are doing very well, have fully recovered, have even more than fully recovered in some cases. And some parts haven't recovered very much at all yet. And those tend to be the ones that involve direct contact with the public. Travel, entertainment, restaurants, things like that. So you do see real disparities between different parts of the economy. It's sort of unusual for an economy like ours."

But, he said, it feels like the nation is at a place where the economy's about to start growing "much more quickly."

He added that widespread vaccination for COVID-19 and strong fiscal and monetary policy support from the federal government were all boosting the nation's economic engine.

A total of 916,000 jobs were added in March, according to recent government figures, topping estimates by a quarter million. Big gains in employment came from industries that were hard hit by pandemic restrictions and fear of going out. Entertainment, leisure, hotels and restaurant businesses all saw increases.

But the nation still has fewer jobs than it did just before the pandemic panic of last winter.

"You know, there are something like 8.5 million, 9 million people, maybe even more than that depending on how you count it, who were working in February of last year before the pandemic and have lost their jobs," he said. "So there're a lot of people out there who need to get back to work. And it's going to take some time. The good news is that we're starting to make progress now. The numbers show that people are returning to restaurants now."

He said new restaurants will be started to replace some of the ones that went out of business, but that "we're not going to forget" those people who were left without jobs as the expansion continues. "We're going to continue to support the economy until recovery is really complete."

As job numbers improve, nearly one in five U.S. adults has been fully vaccinated for COVID-19, according to numbers by Johns Hopkins University.

Despite the successes, however, the number of new infections remains a concern. The U.S. saw 66,533 new diagnoses on Saturday of COVID-19 and several states, such as Michigan, are seeing and upward swing in cases, according to Johns Hopkins.

"The principal risk to our economy right now really is that the disease would spread again," said Powell. "It's going to be smart if people can continue to socially distance and wear masks."

What about inflation?

Powell said the Fed would consider raising rates when the labor market recovery is complete and the nation is back to maximum employment and inflation is back to 2% and is on track to move above 2% for a while.

"It'll be a while until we get to that place. But that's the guidance that we've offered to the public of the conditions we'd want to see before we start raising interest rates." 

When asked why inflation from about 1981 "took a nosedive" and why America now has a generation that's never seen rapidly increasing interest rates or prices, Powell said, "One thing that's so interesting about the economy is that it's ever-changing. You know, it's not like water that always boils at 212° Fahrenheit. The economy that we had during the inflation years was one in which, when unemployment went to a low level, inflation would move up and it would stay up."