President Donald Trump says the U.S. economy will be back and better than ever next year. Federal Reserve Chairman Jerome Powell begs to differ.
In an almost hour-long virtual press conference Wednesday after the Fed left interest rates pinned near zero, Powell repeatedly played down the surprise, welcome news of a pick-up in jobs growth in May that Trump hailed last week as the “greatest comeback in American history.”
Instead the Fed chairman spotlighted the many millions of American still out of work and suggested it would take years for a return to anything like the strong labor market that the U.S. enjoyed before the coronavirus pandemic.
“We have to be honest that it’s a long road,” Powell said. “It’s -- depending on how you count it -- well more than 20 million people displaced in the labor market.”
Just how long a road it will be was seen in the forecasts that policy makers released after their two-day meeting. While they expect the economy to begin to recover from its government-imposed lockdown in the second half of the year, they see unemployment falling slowly – to 9.3% at the end of this year from May’s 13.3% -- and don’t envisage it returning to anywhere near its pre-Covid-19 rate of 3.5% by the end of 2022.
Trump Shout-Out
That dour outlook didn’t stop Trump from telling reporters that the Fed delivered “some good news today” while the president again touted May’s jobs numbers.
Faced with sagging opinion poll ratings, Trump has seized on last week’s report of a fall in joblessness -- from April’s post Great Depression high of 14.7% -- to make his case for re-election in November.
“We’re going to actually be back, higher next year than ever before,” Trump said in triumphant remarks at the White House on June 5, setting aside a week of turmoil over his hostility toward nationwide protests against police brutality following the death of George Floyd. “The only thing that can stop us is bad policy.”
Trump even invoked the memory of Floyd, the black man who died at the hands of Minneapolis police last month, as he touted the U.S. economic recovery from the coronavirus pandemic.