Friday, 19 March, 2021
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2021-03-19 14:01:04.13 GMT
By Jerome Powell
(Dow Jones) — In late February 2020, I attended an overseas meeting of the
G-20 nations' finance ministers and central bank governors. At the time, the
U.S. was enjoying its longest economic expansion on record, and though my Fed
colleagues and I had been monitoring Covid-19, we did not yet see it as likely
to have a major impact at home. But that weekend, it became clear that the
virus was spreading quickly — and widely. I left with the conviction that its
effect would not be confined to faraway lands, as I had thought, but would
reach every part of the globe.
One week later, the Fed held an emergency policy meeting with one item on the
agenda: How could we help people get through what was going to be a terribly
difficult time? Addressing a fast-moving global pandemic was mainly the realm
of healthcare providers and experts, and some asked what the nation's central
bank could realistically do. But we concluded that we had to act forcefully.
The danger to the U.S. economy was grave. The challenge was to limit the
severity and duration of the fallout to avoid longer-run damage.
The ensuing downturn was unprecedented in speed, breadth and intensity.
Financial markets seized up, including the critical market for Treasury
securities, as global investors began a headlong flight to cash. Large
portions of the economy shut down, schools closed and much of the country
retreated indoors. In two short months, the pandemic took 20 million American
jobs — more than double those lost in the Great Recession.
The pandemic inflicted a cruel and uneven toll on lives and livelihoods. It
reversed the broadening gains of a decade of expansion. With unemployment at a
50-year low, wages had been moving up, especially for the lowest paid workers.
Racial disparities in unemployment were narrowing, and many who had struggled
for years were finding jobs. But the new job losses were heaviest among
relatively low-paid workers, among whom minorities and women are
overrepresented. Many smaller businesses faced the possibility of permanent
The scope of the crisis required an all-in government response. Congress
provided its largest economic recovery package of the postwar era. At the Fed,
we used all the tools at our disposal to prevent a financial meltdown and
ensure that credit could continue to flow to households and businesses.
Today the situation is much improved. A little more than half of the initial
job losses have been regained. With the arrival of vaccines, the outlook is
brightening. The American people have persevered through this difficult time
with determination, resilience and ingenuity. We owe a debt of gratitude to
our fellow citizens on the front lines of the response, from health care
workers to vaccine researchers, from those who kept grocery stores open to
those who taught children at kitchen tables.
But the recovery is far from complete, so at the Fed we will continue to
provide the economy with the support that it needs for as long as it takes. I
truly believe that we will emerge from this crisis stronger and better, as we
have done so often before.
–Mr. Powell is Chairman of the U.S. Federal Reserve.
(END) Dow Jones Newswires