Powell: "US Economy Completely Changed by Corona... Fed Must Also Change" (Update)

"Not Returning to Pre-Pandemic Times"
Job Changes Expected Due to Expansion of Remote Work
Radical Changes Anticipated Among New Generation Experiencing COVID-19

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the Federal Reserve (Fed), asserted that COVID-19 has permanently changed the U.S. economy and that the Fed must adapt to these changes.

On the 17th (local time), during a virtual town hall meeting with teachers in Washington DC, Chairman Powell said, "We are no longer returning to the pre-pandemic economy. The Fed must carefully observe how the economy overcomes the pandemic, how it changes, and understand the impact on our policies."

Chairman Powell explained, "We are still living with COVID-19, and this way of life will continue for some time. People and businesses have learned to adapt to living with COVID-19."

He assessed that it remains unclear whether the spread of the Delta variant will affect the economy, stating, "The pandemic still casts a shadow over economic activity, and while we cannot yet declare victory, many companies are continuing their operations by applying new business models."

The Associated Press noted that Chairman Powell focused on various changes that emerged during the COVID-19 era, such as remote work, restaurant takeout sales, and online real estate brokerage.

He predicted, "More remote work will continue in the future, and the nature of work and how it is conducted will change."

In this process, he explained that jobs will be created in sectors investing in new technologies, while jobs will decrease in industries with high face-to-face contact. He also anticipated the spread of automation trends.

Chairman Powell also diagnosed that this situation is delaying the recovery of the travel and restaurant industries.

On this day, Chairman Powell did not provide any hints regarding future monetary policy. The market expected that Powell would refrain from mentioning monetary policy in his speech and Q&A ahead of the Jackson Hole meeting.

A major foreign news outlet analyzed that Chairman Powell indicated that despite the spread of the Delta variant and delays in vaccination, the Fed’s stance that the U.S. economic recovery is on track remains intact.

Experts believe that Chairman Powell is unlikely to announce a decision on tapering asset purchases at the Jackson Hole meeting and is more likely to reach a concrete conclusion at the September Federal Open Market Committee (FOMC) meeting.

The minutes of the July FOMC meeting, to be released on the 18th, could also provide an opportunity to understand the Fed officials’ specific opinions on tapering.

The July retail sales released on this day showed a 1.1% decrease compared to the previous month, suggesting the possibility of an economic slowdown.

Due to the weak retail sales, major indices on the New York Stock Exchange were all falling by nearly 1%.

Concerns over the Afghanistan situation and a slowdown in the Chinese economy were reflected, leading to a preference for safe-haven assets and a sharp rise in the value of the U.S. dollar.

On this day, the dollar index surged 0.56% to 93.142, reaching its highest level since the end of March.

This content was produced with the assistance of AI translation services.