Jerome Powell's doublespeak
Fed chair Jerome Powell on Monday further detailed the U.S. central bank's focus on inequality and disparities in outcomes for poor Americans and communities of color, but never mentioned the part the Fed has played in exacerbating that inequality.
Why it matters: The Fed's newly trained aim of achieving a "broad and inclusive" recovery, as Powell has termed it, rings hollow for many when Fed policymakers neglect to acknowledge the enormous role they play in the issue.
- That could contribute to the continued low marks Americans give the Fed in trust and popularity.
What happened: Powell spoke to the National Community Reinvestment Coalition ahead of the release of the Fed's Survey of Household Economics and Decisionmaking (SHED) report later this month. He focused much of his message on how the Fed is working to improve outcomes for larger portions of the population.
- Specifically, the chairman highlighted low-income workers, small businesses and communities of color as facing "immense difficulties" and being "disproportionately affected" by the pandemic-induced recession and top of mind in the Fed's new framework.
By the numbers: The report found that 22% of parents "were either not working or working less because of disruptions to childcare or in-person schooling," and even higher numbers for Black and Hispanic mothers, 36% and 30%, respectively.
- Powell also noted the report's findings that around 20% of people aged 25 to 54 without a four-year college degree were laid off in 2020, versus 12% for those with at least a bachelor’s degree.
- And about 14% of whites in their prime working years were laid off at some point last year compared to 20% or more for Black folks and Hispanics in that group, Powell said.
Yes, but: Notably absent from the speech and a 40-minute question-and-answer session was any significant discussion of how the Fed's policies have increased and entrenched that inequality.
- By propping up big businesses and financial markets with its QE4ever program, the Fed disproportionately helps give wealthy individuals and corporations a massive advantage.
- And those most impacted by the pandemic have been the ones least assisted by the Fed's easy monetary policy.
The bottom line: Powell's goals seem to be improving outcomes for marginalized communities while also bolstering the Fed's reputation and standing in those communities. However, by ignoring the elephant in the room, the Fed has had little success with either goal.