July 29, 2020
Jerome H. Powell
July 29, 2020 FOMC Press Conference
- The chair said household spending appears to have recovered about half of its earlier decline, with services like air travel and hotels showing much less pickup.
- The chair said the contraction in real GDP in the second quarter will likely be the largest on record.
- The chair said the rise in joblessness has been especially severe for lower-wage workers, women, and African Americans and Hispanics.
- The chair said the Fed extended its emergency lending programs through the end of the year and will put them back in the toolbox after the crisis passes.
- The chair said the Fed’s monetary policy framework review was delayed by the pandemic but resumed at this meeting, with no details to share yet.
From the opening statement
Press conference
CHAIR POWELL. Good afternoon. The pandemic continues to cause tremendous human and economic hardship here in the United States and around the world. The most important response to this public health crisis has come from our health-care workers, and we remain grateful to them and to the many other essential workers for putting themselves at risk day after day in service to others and to our country. All of us have a role to play in our nation’s response to the pandemic. At the Federal Reserve, we remain committed to using our tools to do what we can, and for as long as it takes, to provide some relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.
In recent months, economic activity picked up as the economy began to reopen. Many businesses opened their doors, factories restarted production, and more people left their homes to engage in various activities. As a result, household spending looks to have recovered about half of its earlier decline, although spending for services such as air travel and hotels has shown much less of a pickup. The recovery in household spending also likely owes to federal stimulus payments and expanded unemployment benefits, which provided substantial and timely support to household incomes. In contrast, indicators of business fixed investment have yet to show a recovery. Even with the improved economic news in May and June, overall activity remains well below its level before the pandemic, and the contraction in real GDP in the second quarter will likely be the largest on record.
The labor market has followed a similar pattern. After precipitous drops in March and April, employment rose strongly in May and June as many people returned to work from temporary layoffs. As a result, of the roughly 22 million jobs that had been lost, about one-third had been regained as of the June payroll report. The unemployment rate declined in May and June but, at 11.1 percent, remains far above its level before the outbreak and greater than the peak during the Global Financial Crisis. In addition, the downturn has not fallen equally on all Americans, and those least able to bear the burden have been the most affected. In particular, the rise in joblessness has been especially severe for lower-wage workers, for women, and for African Americans and Hispanics. This reversal of economic fortune has upended many lives and created great uncertainty about the future.