michelle w bowman : the economic outlook and implications for monetary policy speech ( via webcast ) by ms michelle w bowman, member of the board of governors of the federal reserve system, at the colorado forum, denver, colorado, 5 may 2021. * * * thank you for this opportunity to address the members of the colorado forum, which has been an arena for thoughtful discussion and debate for more than 40 years. today i would like to discuss a subject that i expect is of great interest to coloradans and others : the outlook for the u. s. economy in 2021. i believe that the economy has gained momentum in the past several months and is well positioned to grow strongly in 2021. nevertheless, we have further to go to recover from the economic damage inflicted by the covid - 19 pandemic, and risks remain. as we all know, starting in late february or march of last year, widespread economic and social lockdowns and other effects of the pandemic caused the swiftest and deepest contraction in employment and economic activity since the great depression. money markets, the treasury market, and other parts of the financial system seized up, and there were fears of another severe financial crisis. the federal reserve stepped in quickly to assist, reviving several lending facilities used in the previous crisis and creating several new facilities. we also cut short - term interest rates to near zero and began purchasing large quantities of treasury and agency securities to help sustain the flow of credit to households and businesses. congress and the administration also worked together to provide effective and timely support. calm was restored in financial markets, and employment and output began growing in may, but it was a very deep hole to fill. since that time, progress in controlling the pandemic has been a dominant force driving the economic recovery. rapid progress last summer gave way to slower economic growth over the turn of the year, as infection rates once again surged. but after a substantial pickup in vaccinations and steep declines in virus - related hospitalizations and deaths, the economic outlook has brightened. job creation had stalled over the winter months but improved again starting in february. over the past year, we ’ ve seen a return of nearly 14 million jobs. another significant factor contributing to the recovery is the resilience of private - sector businesses. our economic recovery has been more rapid and stronger than many forecasters expected, partly due to the ability of businesses to adapt to conditions that none of them had planned for, and few even imagined

, which is why my colleagues and i on the fomc decided last week to maintain our highly accommodative stance of monetary policy. despite the progress to date and the signs of acceleration in the recovery, employment is still considerably short of where it was when the pandemic disrupted the economy and it is well below where it should be, considering the pre - pandemic trend. in particular, our maximum employment mandate is intended as a broad and inclusive goal increasing employment and opportunity, but i remain concerned that employment gains for some minority groups have lagged behind those of others. while job creation has been and is expected to remain strong, the pace will eventually slow as the share of those who have been unemployed for the longer - term increases among those who are looking for work. we are making good progress toward our full employment goal, but we still have a long way to go, and risks remain. 2 / 3 bis central bankers'speeches this brings me to the other side of our policy mandate. over the next several months, i expect that headline inflation measures will move above our long - run target of 2 percent. a main reason i expect this outcome is simply the fact that the very low inflation readings during last spring ’ s deep economic contraction will drop from the usual calculation of 12 - month price changes. but in addition, the unusually rapid rebound in economic activity that we ’ ve seen, along with the pandemic - driven shift towards goods purchases, has led to supply - chain bottlenecks in a number of areas, which in turn have pushed up prices for many goods. one prominent example is with semiconductor producers and their need to dramatically alter the mix of production to meet demands of the high - tech and automotive industries. although i expect these upward price pressures to ease after the temporary supply bottlenecks are resolved, the exact timing of that dynamic is uncertain. if the supply bottlenecks prove to be more long - lasting than currently expected, i will adjust my views on the inflation outlook accordingly. at this point, the risk that inflation remains persistently above our long - run target of 2 percent still appears small. in summary, let me say that i am encouraged by the recent pace of the economic recovery, and i remain optimistic that this strength will continue in the coming months. one reason for my optimism is that businesses have been effective in responding to the challenges posed by the pandemic and by economic restrictions implemented in efforts to contain it. we really can