Eric Baradat / AFP via Getty Images
Updated at 4:37 p.m. ET
Federal Reserve Chairman Jerome Powell said employment growth was growing faster than many expected, but it could take years for the economy to fully recover.
“I would say that today’s job report was good,” he said. “By May and June, we got several people back to work.”
Powell also said that the central bank is not ready to disappoint soon and interest rates will remain low for a long time.
“We believe that the economy will need low interest rates, which support economic activity, for a long time,” he said. “It will be measured in years.”
While many jobs have returned, up to 11 million people have not yet returned to work, including those in hotels, entertainment and travel, Powell said.
“And in a sense, these may be some of the hardest jobs to find because there are parts of the economy that will take longer to recover,” he said.
Powell also said that following social distance instructions and wearing a mask is essential to control the virus and return the country to full employment.
“In fact, there are huge financial benefits nationwide for people wearing masks and keeping their distance,” he said.
Under Powell, the Fed has made unprecedented efforts to support the economy during the pandemic.
As state and local governments urged residents to stay home and businesses shut down in a bid to stop the spread of the virus, tens of millions of people lost their jobs in a matter of weeks, sending unemployment soaring. almost 15% in April.
The Fed came in quickly, devising a series of initiatives to raise trillions of dollars in the economy by cutting interest rates to zero and restarting a bond-buying program used during the Great Recession.
The central bank has also taken steps to make low-interest loans available to banks, money market funds, state and local governments and businesses of all sizes.
Many economists say the Fed’s rapid efforts have made the downturn less severe than it would otherwise be, and unemployment is gradually shifting downwards.
But many critics say the Fed’s actions helped Wall Street more than Main Street. The belief that the Fed is ready to let money flow whenever necessary has fueled a major recovery in the financial markets. shipping stock to record highs from March – however significant indicators fell this week.
Unemployment fell to 8.4% in August, but employment growth has slowed, the Labor Ministry said earlier on Friday. (Shortly before the pandemic hit the US economy, the unemployment rate fell to a 50-year low of 3.5%.)
Powell’s comments come a week after his announcement a significant change in the Fed’s inflation targeting policies. Powell said the Fed would allow inflation to exceed the 2% threshold before raising interest rates, possibly giving the economy more room to grow.
“Many people think it’s the opposite that the Fed would like to raise inflation,” Powell told the public. “However, persistently very low inflation can pose serious risks to the economy.”