The economy has rebounded significantly from the coronavirus pandemic but inflation has increased “notably” and COVID-19 still poses risks to the recovery, Federal Reserve Chairman Jerome Powell told a special House subcommittee on Tuesday.
The widespread availability of vaccines and trillions of dollars in fiscal and monetary support from Congress and the Fed has led to the fastest growth in gross domestic product in decades, Powell told the House Select Subcommittee on the Coronavirus Crisis.
But, while the labor market is still much improved from the depths of spring 2020, it is not yet where it should be, he added.
“The economic downturn has not fallen equally on all Americans,” Powell said in his prepared opening remarks, “and those least able to shoulder the burden have been the hardest hit.”
“In particular, despite progress, joblessness continues to fall disproportionately on lower-wage workers in the service sector and on African Americans and Hispanics,” Powell said.
And inflation has reared its ugly head, with the consumer price index rising at an annual rate of 3.8% in May, excluding food and energy. That is well above the Fed’s stated goal of 2%, but Powell and other Fed officials have said they believe the spike is temporary.