What’s happening: The U.S. economy is still down 9.5 million positions since February 2020, putting enormous pressure on the central bank to continue stimulating it for the foreseeable future. Expect Powell to hit this point hard when the Fed announces its latest policy decision this week.
This gives the Fed much more leeway to keep interest rates lower for longer – and that’s what many economists expect it to do.
“They said they are willing to be patient,” Joseph Brusuelas, chief economist at RSM US, told me.
The approval of President Joe Biden’s $ 1.9 trillion aid package may help. Airlines said last week that they were canceling licenses, and supplemental unemployment benefits and stimulus checks are expected to boost demand, supporting employment in struggling industries.
“This is simply not going to happen behind this particular legislation,” he said.
The package does not eliminate economical scars. Many jobs in the hospitality, entertainment and retail sectors will never return. Harvard University researchers found that the number of small open companies is still 32% lower compared to January 2020. The Economic Policy Institute, analyzing the latest job vacancy report from the Bureau of Labor Statistics, notes that for every 15 workers unemployed, there were only jobs available for 10 of them.
“This bartender will have to learn to program. This waitress will have to be digitally literate, because her jobs are unlikely to exist at the start of the post-pandemic economy,” said Brusuelas.
The solution to this problem can be left to Congress and the Biden government, given the limited tools available to the Fed. Treasury Secretary Janet Yellen said there will be another bill that “addresses job creation through development infrastructure [and] through investment in people, education and training. “
In the meantime, lawmakers will need the Fed to continue providing support – even if inflation concerns arise again in the financial markets.
Why small supermarkets are (still) out of toilet paper
If you have visited the local independent grocery store recently, you are likely to still encounter a shortage of items such as toilet paper, paper towels and cleaning supplies.
Without access to the main products, small traders say, they are losing customers and facing another obstacle in trying to survive against large networks.
It is not an entirely new problem. Prior to the pandemic, independent grocery owners were often told that they could not obtain specific products or items available from major chains, according to Christopher Jones, senior vice president for government relations and advisor to the National Grocers Association.
“What happened during the Covid pandemic is that this problem has actually been magnified,” said Jones.
There is no publicly available data tracking products out of stock in small and large stores. But Burt Flickinger, a supermarket consultant for the Strategic Resource Group, said he and his team visit stores across the country every week and found in the pandemic that store chains “from afar” have a better supply than independent stores.
Next
Monday: China’s retail sales, industrial production and unemployment rate
Tuesday: US retail sales and industrial production
Friday: Bank of Japan political decision