Although the Delta variant of Covid 19 gives every indication of being as widespread and stubborn as the earlier version of the pandemic, how it will affect the national economy remains unclear.
So says Federal Reserve Chairman Jerome Powell in remarks delivered during a town hall meeting in Washington with educators and students.
While acknowledging that the pandemic remains a force, and “that is likely to continue to be the case for a while,” Power said the lessons of the last 17 months, since Covid 19’s outbreak, have not been lost.
“People and businesses have improvised and learned to adapt, to live their lives despite Covid,” the chairman remarked.
While the national response to the Delta variant may be less acute than the initial response to Covid 19, Powell nevertheless made sure to emphasize that it’s “not clear whether the Delta strain will have important effects on the economy.”
Continues Powell: “While more people are getting vaccinated, the pace of vaccination has slowed. A couple of months ago, we were ahead of many other similar countries in vaccination. Now, we’re falling behind, and one result you’re seeing is in the current outbreak of the Delta strain that we’re seeing in some parts of the country.”
Because the economy has been running so strong since the national reopening earlier this spring, Powell added that that he is not convinced that the Delta variant will ultimately do much damage.
In fact, the Federal Reserve is currently forecasting a strong last quarter for 2021, with Powell remarking that many companies across the country “have adapted their business models to the new world,” and are otherwise enduring.
According to the just-released minutes of Fed’s Open Market Committee, employment growth is likely to fuel the national economy for the rest of the year, with inflation pegged to decline.
In an additional sign of the Fed’s confidence that the national economy is recovering, the minutes also show a determination to gradually reduce asset purchases that were originally used at the beginning of the pandemic to prop up the economy.
Last year the Fed purchased a monthly average of $80 billion in Treasury securities and another $40 billion in mortgage-based securities. In so doing, the Fed helped to reduce long-term interest rates.
By Garry Boulard
