The national unemployment rate obscures how hard some people are already suffering in the aftermath of the pandemic. That’s why the Federal Reserve considers more than just the national unemployment rate when assessing the country’s economic health.
“We don’t just look at the headline numbers when we say maximum jobs is a deep and inclusive target,” Fed Chairman Jerome Powell said in his semi-annual testimony to the Senate Banking Committee on Tuesday.
Powell told the committee that certain groups are bearing the brunt of the pandemic’s effects, with unemployment rates still higher than the national average.
Despite the fact that the national unemployment rate fell to 6.3 percent in January, White workers have a much lower unemployment rate (5.7 percent) than other groups: According to the Bureau of Labor Statistics, the Black unemployment rate was 9.2 percent in January, while the Hispanic unemployment rate was 8.6 percent.
Women over the age of 20 have the same unemployment rate as men, which is 6%. However, this, too, does not say the whole tale. Some women have been forced to leave the workforce to care for their families as a result of the pandemic, and they are not included in the unemployment rate.
Meanwhile, women kept all of the 140,000 jobs lost in the United States in December.
Powell expressed hope that these consequences would be temporary, but noted that they restricted these workers’ capacity to contribute completely to the economy.
“Policies that put the pandemic to an end will help,” he said at the end of the day.
Senator Pat Toomey, the committee’s ranking member, said at the outset of the hearing that he would prefer the Fed to concentrate on racial injustice and climate change rather than its main goals of price stability and full employment.
Although Powell agreed that fiscal policy, rather than the blunt instruments of monetary policy, is better suited to addressing issues of inequality, he continued to emphasize that additional support for certain groups is still needed.
“The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain,” Powell said in his prepared remarks to the committee.
The Federal Reserve has consistently stated that it will not increase interest rates as long as unemployment remains high and inflation remains well below its goal of 2%. However, as the economy completely reopens this year, inflationary pressures will increase. Treasury bond yields have risen in recent days as a result of this anticipation, causing some stock market jitters. Bond rates and yields shift in opposite directions.
Powell is scheduled to testify before the House Financial Services Committee on Wednesday.
