Fed Chief Jerome Powell Calls COVID-19 'Biggest Shock' To US Economy In 'Living Memory'

After the Federal Reserve kept its benchmark interest rates unchanged at near-zero Wednesday, Fed Chairman Jerome Powell said at a virtual press conference that the current economic downturn is the most severe of his lifetime.

Powell said that the COVID-19 pandemic imparted the “biggest shock” to the U.S. economy in “living memory.” But he praised the government’s fiscal response to the crisis as “strong, fast and broad” and that their policies have produced results in the sense that many small businesses remain in business.

However, he cautioned that there is a need for much more support from Congress.

Powell specifically mentioned that people who work in service industries where close contact is required – bars, restaurants, hotels, etc. – will need significant assistance, as many of their jobs are unlikely to return.

To a question about rising inequality in the country, Powell noted these trends predated the pandemic and were the result of complex historical phenomenon. But the Fed chief conceded that inequality is a particularly heavy burden on women, minorities and low-income people.

Powell said the Fed’s task is to “create an environment where those people have the best chance to get back to work.”

Noting that companies are cutting wages, Powell said that scenario underscores how far the labor market still has to go. “It’s a tough situation,” he said, citing that an “awful lot” of people are looking for work.

He reiterated that the future path of the economy will follow developments in the pandemic.

“We’re not even thinking about raising interest rates,” he added.

In response to a question about sexual harassment in corporations and the Fed, Powell acknowledged that women have suffered harassment and injustice and that the Fed should have done more to prevent this kind of behavior. He added that the Fed has a “high priority” in establishing a “diverse and inclusive” organization.