For us, while #ChairPowell’s testimony before #Congress yesterday and the day prior didn’t reveal any new policy news, it did highlight the longer-term #economic challenges the country faces.
Specifically, the # Fed Chair emphasized that not only is the loss to #growth the most severe on record, but the “burden of the downturn has not fallen equally on all Americans. Instead, those least able to withstand the downturn have been affected most.”
And while some questioned the Chair about potential risks created by the expansion of the #Fed’s balance sheet, Chair Powell downplayed the idea of even having to unwind the balance sheet expansion, suggesting that #economic growth would shrink its relative size over time.
Finally, we think many attribute the #Fed’s actions too closely with #market reactions and do not differentiate the Fed’s dual mandate roles of full #employment and price stability versus broad #economic conditions, which would be reflective of market price action.
The fact is that #ChairPowell is clearly focused on stemming the medium- to long-term damage to #labor #markets, and in the current context other considerations are simply secondary.
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