WASHINGTON: Federal Reserve Chairman Jerome Powell said on Tuesday that the US economy has been permanently transformed by the COVID pandemic and it is important that the central bank adapts to those changes.
We’re not just going back to the economy we had before the pandemic, Powell said at a Fed virtual town hall for teachers and students. We need to watch carefully as the economy progresses through the pandemic and try to understand how the economy has changed and what are the implications for our policy.
Powell said that, although it is not yet clear whether the delta version of COVID will have a further impact on the economy, the country has already seen significant changes since the pandemic began in March 2020.
Those changes range from an increase in remote working, to restaurants offering more take-out meals, to real estate agents learning to show homes virtually, he said. Many companies have already made huge investments in technology to adapt to the challenges the pandemic has presented.
Powell said it seems almost certain that there will be more remote work ahead. This will change the nature of work and the way of working.
Powell said that heavy investment by companies in new technology means there will be more jobs associated with maintaining that technology in the future, but there will also be potential job losses in industries focused on personal interaction. He said some of those industries are moving towards an automated, no-contact model.
This trend is already visible in jobs data, with the recovery slow in industries that rely on public connectivity, such as travel, leisure and hospitality. Powell said those jobs are held unequally by women and people of color and generally pay low wages.
It may be that some of these people will have a hard time returning to the workforce without more education and training, he said. He said there are lakhs of people who have lost service sector jobs and are out of work and need support. This is part of the recovery that is far from complete. he said.
Speaking to an audience of students and teachers, Powell said the pandemic could turn out to be a historic turning point that would allow the current generation of students to turn the lessons learned into profound instruments of change.
He said that students who have gone through the pandemic will see the world differently.
You have seen a world, but you have also seen a world that is changing, sometimes in a week, faster than some of us have experienced over the course of decades.”
Powell said that this is an extraordinary time and I am confident that it will result in an extraordinary generation.
The Town Hall is an event initiated by Ben Bernanke, one of Powell’s predecessors as Fed Chairman, and continued by former Fed Chair and now Treasury Secretary Janet Yellen. It seeks to highlight the importance of classes in economics.
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