Economy as we knew it could be over, says Fed chairman

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The pandemic has accelerated existing trends in the economy and society, including the increasing use of technology, telecommuting and automation, he said. It will have lasting effects on the way people live and work.

While technological advancements are generally positive for companies in the long run, Powell said, in the short run they create disruption and as the market adapts to the new normal the pain is not shared equally. .

For example, it’s likely that the lowest-paid workers, as well as those in jobs that require in-person interactions, such as retail or restaurant workers, will shoulder most of the burden of this change. These groups, heavily oriented towards women and minorities, have already been among the most affected by layoffs in the event of a pandemic, Powell said.

The post-pandemic economy is also likely to be less productive: women were forced to quit their jobs due to childcare responsibilities during the crisis, and children are not getting the education they deserve, Powell said.

Generally speaking, inequalities hold back the economy, the central banker said.

“Even after the unemployment rate drops and a vaccine is put in place, there will likely be a significant group of workers who will need support to find their way into the post-pandemic economy, as it will be different in the future. some basic ways, ”Powell said.

Washington has spent trillions of dollars to stimulate the economy in the wake of the pandemic. But unemployed workers are still in a difficult situation: some benefits have already diminished and others are expected to expire at the end of the year. Economists are hopeful the next administration manages to pass another stimulus bill to help workers and businesses as the recovery continues.

There is still work to be done

Powell has long said the economy may need more stimulus from the government and the central bank to get through the crisis. He echoed that sentiment again on Thursday.

“My feeling is that we will have to do more and that Congress will have to do more,” he said.

While the prospect of a vaccine is good news, many questions remain, including the resurgence of the virus around the world.

“The main risk we see today […] is the spread of disease here in the United States, ”he said. Several states have revived their pandemic restrictions to stem the spread.

US stocks weakened following thought-provoking comments from Powell. The market had recently rallied to the hopes of vaccines.

the Dow (UNDUE) closed 1.1%, or 317 points, down, while the largest S&P 500 (SPX) fell 1%. The techie Composite Nasdaq (COMP) finished 0.7% lower.

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