Federal Reserve Chair Jerome Powell on Wednesday said the coronavirus crisis is worsening racial inequality and delivered a passionate pledge to reverse the massive U.S. job losses that have fallen most heavily on blacks and other minorities.
FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell arrives to speak to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world's largest economy from the impact of the coronavirus, in Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque/File PhotoRace, gender, and the economically corrosive effects of inequality have become more frequent topics for Fed speeches and research in recent years, but Powell’s remarks were unusually pointed.
The “biggest thing” the Fed can do to combat high black unemployment and other economic inequities, he said, is to use its tools to push down unemployment.
“The economy can have very low unemployment, very low unemployment” without sparking inflation or financial imbalances, Powell said in a news conference following a policy-setting meeting where the central bank signaled it would keep interest rates near zero for years to come.
“We can use our tools to support the labor market and support the economy. We can use them until we do fully recover,” he said.
Powell spoke a day after the funeral of George Floyd, a black man whose killing on May 25 during an arrest by police in Minneapolis touched off weeks of mass protests worldwide against racism and inequality.
“I want to acknowledge the tragic events that have again put a spotlight on the pain of racial injustice in this country,” Powell said, adding that there is “no place” for racism in the United States. “Everyone deserves the opportunity to participate fully in our society and in our economy.”
The civil unrest has taken place against the backdrop of a sharp recession that crushed hard-won labor market gains among African Americans, Hispanics and women during the record-long U.S. expansion that ended in February.
Those job losses are “really, really, really unfortunate” because just a few months back “we had effectively the first tight labor market in a quarter century,” Powell said. “The downturn has not fallen equally on all Americans.”
And while the Fed cannot target a recovery for specific groups, he said policymakers are “cognizant of the fact” that workers on lower end of the wage spectrum did not feel the benefits of the recovery until the final years of the expansion.
Black unemployment, historically about double white unemployment, fell as low as 5.8% before the crisis hit. Then authorities began imposing shutdowns to slow the spread of infection, and unemployment exploded across the board. But black workers faced steeper losses: in May, black unemployment rose to 16.8%, while white unemployment fell to 12.4%.
Some 3.2 million fewer blacks are employed now than were before the crisis, the data show.