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Fed Chair Jerome Powell during a virtual press conference last month. Photo: Federal Reserve via Getty Images

Federal Reserve Chairman Jerome Powell said during a virtual interview Friday that the economic blowback from the coronavirus pandemic is hitting those who can least afford it the hardest.

Why it matters: The U.S. economy has plunged into the worst downturn since the Great Depression at a record pace, and a full recovery may take years. More Americans are collecting unemployment now than ever before in history — and 40% of those out of work are in the poorest U.S. households, per a recent Fed survey.

"The pandemic is falling on those least able to bear its burdens. It is a great increaser of inequality. It is low-paid workers who are bearing the brunt of this and women to an extraordinary degree."
— Powell, speaking to Princeton professor Alan Blinder

Powell’s comments came in response to a question about whether the Fed’s latest policies will lead to more income inequality in America. He said "absolutely not."

  • Powell said the Fed’s recent actions were aimed at "creating an environment" where workers will have the best chance to keep their job, get a new job, or go back to their old job if they were furloughed.
  • The Fed's policies have been cited as one reason for the stock market's rebound.

Powell also said that its loan program for medium and large businesses, called the Main Street Lending Program, is "days away" from making its first loans.

  • Powell added that a full economic recovery "will really depend on people being confident that it's safe to go out," while a second wave of the outbreak would "undermine public confidence and might make for a significantly longer recovery, and weaker recovery."

The backdrop: The Fed has taken huge — and sometimes unprecedented — steps in an effort to support key funding markets and the economy.

  • "We crossed a lot of red lines, that had not been crossed before ... this is that situation in which you do that, and you figure it out afterward," Powell said.

Go deeper

Dion Rabouin, author of Markets
Sep 2, 2020 - Economy & Business

Here comes the real recession

Illustration: Sarah Grillo/Axios

Economists are warning that the economic downturn caused by the coronavirus pandemic is now creating another recession: mass job losses, business failures and declines in spending even in industries not directly impacted by the virus.

Why it matters: The looming recession — a possible recession within a recession is less severe than the coronavirus-driven downturn. But it's more likely to permanently push millions out of the labor force, lower wages and leave long-lasting scars on the economy.

31 mins ago - World

Jimmy Lai among Hong Kong pro-democracy leaders sentenced to prison

Students standing under a banner during a flag raising ceremony on the first annual National Security Education Day in Hong Kong. Photo: Vernon Yuen/NurPhoto via Getty Images

A Hong Kong court sentenced a group of pro-democracy activists to up to 18 months in prison Friday for organizing a massive unauthorized protest in August 2019 that drew an estimated 1.7 million people, AP reports.

Why it matters: Critics say the sentences send the message that even peaceful pro-democracy activism will be severely punished. They mark a continuation of Beijing's overhaul of Hong Kong's political structure, designed to crack down opposition to the Chinese Communist Party.

Local news moves to the inbox

Illustration: Annelise Capossela/Axios

A slew of new companies are launching platforms for local newsletters, a shift that could help finally bring the local news industry into the digital era.

Driving the news: Substack, the email publishing platform for independent journalists, on Thursday announced a new local news platform.

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