Fed Chair Powell warns of widening inequalities in US
US Federal Reserve Chairman Jerome Powell has warned once more that the coronavirus pandemic is further widening the gap between the rich and poor in the United States.
Powell told lawmakers on Tuesday that the coronavirus crisis plunged the into an uncertain, uneven and prolonged economic situation with the poor suffering the most.
Addressing the Senate Banking Committee, Powell testified that the crisis could be long-lasting, particularly for lower-income workers, eroding skills and turning temporary job losses into permanent ones.
"The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures," Powell said.
Powell warned that lawmakers needed to take preventive measures to stop the long-term economic damage to low-income American households.
“Low-income households have experienced, by far, the sharpest drop in employment, while job losses of African-Americans, Hispanics, and women have been greater than that of other groups,” Powell said, adding,“If not contained and reversed, the downturn could further widen gaps.”
Powell’s comments were part of his two-day semiannual testimony before Senate and House lawmakers.
Lawmakers have enacted substantial fiscal stimulus, with Congress approving direct payments to individuals and funding for small business loans. While the central bank noted in its Monetary Policy Report to Congress, released last week, that the fiscal policy response so far “constitutes the fastest and largest fiscal response to any postwar economic downturn,” it signaled that the path to recovery remains “extraordinarily uncertain,” and highlighted that state governments in particular are coming under stress.
Powell said "to support the economy in this challenging time” Congress needed to pass new legislation to “provide direct help to people, businesses, and communities.”
“This direct support can make a critical difference not just in helping families and businesses in a time of need, but also in limiting long-lasting damage to our economy,” he pointed out.
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