, in contrast to the usual pattern, the household sector was a major stabilizing force. as a consequence, although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is more limited. in fact, there are a number of pluses and minuses in the outlook for household spending. low mortgage interest rates and favorable weather have provided considerable support to homebuilding in recent months. moreover, attractive mortgage rates have bolstered both the sales of existing homes and the realized capital gains that those sales engender. they have also spurred refinancing of existing homes and the associated liquification of increases in house values. these gains have been important to the ongoing extraction of home equity for consumption and home modernization. the pace of such extractions likely dropped in response to the decline in refinancing activity that followed the backup in mortgage rates that began in early november. but mortgage rates remain at low levels and should continue to provide support to activity in this sector. consumer spending received a considerable lift from the sales of new motor vehicles, which were remarkably strong in october and november owing to major financing incentives. sales have receded some as incentives were scaled back, but they have remained surprisingly resilient. other consumer spending appears to have advanced at a moderate pace in recent months. the substantial declines in the prices of natural gas, fuel oil, and gasoline have clearly provided some support to real disposable income and spending. to have a more persistent effect on the ongoing growth of total personal consumption expenditures, energy prices would need to continue declining. futures prices do not suggest that such a decline is in the immediate offing, but the forecast record of these markets is less than sterling. although the quantitative magnitude and the precise timing of the wealth effect remain uncertain, the steep decline in stock prices since march 2000 has, no doubt, curbed the growth of household spending. although stock prices recently have retraced a portion of their earlier losses, the restraining effects from the net decline in equity values presumably have not, as yet, fully played out. future wealth effects will depend importantly on whether corporate earnings improve to the extent currently embedded in share prices. perhaps most central to the outlook for consumer spending will be developments in the labor market. the pace of layoffs quickened last fall, especially after september 11, and the unemployment rate rose sharply. over the past month or so, however, initial claims for unemployment insurance have decreased markedly, on balance

jerome h powell : coronavirus aid, relief and economic security act speech by mr jerome h powell, chair of the board of governors of the federal reserve system, before the committee on financial services, us house of representatives, washington dc, 22 september 2020. * * * chairwoman waters, ranking member mchenry, and other members of the committee, thank you for the opportunity to update you on our ongoing measures to address the hardship wrought by the pandemic. the federal reserve, along with others across government, is working to alleviate the economic fallout. we remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy. economic activity has picked up from its depressed second - quarter level, when much of the economy was shut down to stem the spread of the virus. many economic indicators show marked improvement. household spending looks to have recovered about three - fourths of its earlier decline, likely owing in part to federal stimulus payments and expanded unemployment benefits. the housing sector has rebounded, and business fixed investment shows signs of improvement. in the labor market, roughly half of the 22 million payroll jobs that were lost in march and april have been regained as people return to work. both employment and overall economic activity, however, remain well below their pre - pandemic levels, and the path ahead continues to be highly uncertain. the downturn has not fallen equally on all americans ; those least able to bear the burden have been the most affected. the rise in joblessness has been especially severe for lower - wage workers, for women, and for african - americans and hispanics. this reversal of economic fortune has upended many lives and created great uncertainty about the future. a full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities. the path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government. since mid - march, we have taken forceful action, implementing a policy of near - zero rates, increasing asset holdings, and standing up 13 emergency lending facilities. we took these measures to support broader financial conditions and more directly support the flow of credit to households, businesses of all sizes, and state and local governments. our actions, taken together, have helped unlock more than $ 1 trillion of funding, which, in turn, has helped keep