Federal Reserve press conference, 2020-07-29 — Chair Jerome Powell

Question (Rachel Siegel, Washington Post): Hey, Chair Powell. Thank you for taking my question. I’m wondering if you can be a bit more specific about any risks that you see related to a double-dip recession or signs that the recovery was stalling, or maybe begin to stalling, compared to some of the signs that we were seeing earlier in the summer. Thanks very much.
Answer: Yeah. So maybe I’ll talk more broadly about the—the outlook and include your—include your question in it. So, as I mentioned, economic activity and employment picked up beginning in May and right through June and remained well below their levels because, I’d say, job gains have reversed about a third of the job losses from March and April, and consumer spending has reversed about a half of the drop. So—but, nonetheless, those were—those were sooner and stronger than we expected. So—but what happened then was, along with that positive data, we got—we got the virus increases starting in the middle of June in lots and lots of states around the country. And that brings us to a new—a new point here, which is, we need to—in addition to dealing with the health crisis—we have to remember, this is really a health crisis, and these are people who are having the coronavirus, and it’s taking a terrible toll, so we’ve got to deal with the economic ramifications of that. So what we’re seeing is that we monitor quite a lot of what we—what we think of as sort of nonstandard, high-frequency data. That’s become a very important thing, even more important than usual in the work that we do. And what that data show, on balance, is that the pace of the recovery looks like it has slowed since the cases began that spike in June. So some measures of consumer spending based on credit card and debit card data have moved down. Recent labor market indicators point to a slowing in job growth, particularly among smaller businesses. Hotel occupancy rates have flattened out. People aren’t going out to restaurants, bars, gas stations, pharmacies, and beauty salons as much. Consumer surveys, by the way, which had dropped very sharply when the pandemic arrived and then moved back up sharply— they look like they may be softening again now. There are still some areas of strength. Housing and motor vehicle sales have still been strong. Nonetheless, on balance, it looks like the data are pointing to a slowing in the pace of the recovery. But I want to stress, it’s—it’s too early to say both how large that is and how sustained it will be. We just don’t know yet, because we have to wait for—to see the, you know, the actual data on spending and employment come in, and—but this—this is what we’re seeing, and, of course, we’re monitoring it very carefully. And I’d be remiss in not stressing this enough. The path of the economy is going to depend to a very high extent on the course of the virus and on the measures that we take to keep it in check. That is just a very fundamental fact about our economy right now. The two things are not in conflict. You know, social-distancing measures and fast reopening of the economy, they actually go together. They’re not in competition with each other. So—