The Federal Reserve Chairman Jerome Powell stated during a virtual panel discussion at the European Central Bank’s Forum that he believes even though the economy is recovering, its dynamics will be very different from the old economy.
The use of technology, telework, and automation has increased and even though these trends were already present in the economy, now they are most likely to change the way people live and work in the long-term.
Powell explains that technological advancements have their benefits of course, but only if the society adapts to it over a long period. If it is a short-term and immediate change, it can have negative impacts, because when the market adapts, many people will be left out.
During this change, workers with minimum pay and those who need to interact with people personally will be affected greatly. Most of these jobs are held by women and minorities, who were already disproportionately affected by the pandemic.
Productivity is also predicted to decrease as many women have left the labor force because they had to take care of their children. Powell also continues to add that inequality proves as a hindrance to the growth of the economy.
He also explains that after the pandemic is over and unemployment rates decrease, many workers will still need support to be able to stand up on their own two feet because navigating the new economy is going to be difficult.
The government released a stimulus package earlier this year, however, people who have lost their jobs are still suffering and the benefits are set to expire in December this year. Our only hope is that the Biden administration releases another stimulus package to support workers and businesses.
Powell emphasized that the government and the central bank will need to provide a large stimulus package to assist people in this pandemic crisis.
Even though Pzifer announced the vaccine is in its last stages, however, there are many concerns related to that as well; such as the equal distribution of the vaccine that will require additional infrastructure and resources. Many are also concerned about the second wave of the virus that has been affecting countries all over the world.
Several states in America have imposed coronavirus SOPs as precautionary measures and to halt the spread of the virus