Powell Downplays Delta Variant Risk to Economy: ‘We Learned To Live with It’

US Federal Reserve Board Chairman Jerome Powell arrives for the G20 finance ministers and central bankers meeting in Venice on July 9, 2021. (Photo by Andreas SOLARO / AFP) (Photo by ANDREAS SOLARO/AFP via Getty Images)
Photo by ANDREAS SOLARO/AFP via Getty Images

The Federal Reserve chair Jerome Powell appeared to indicate that the central bank is less concerned about another wave of covid infections than it had been about earlier waves.

Powell pointed out that the second wave of infections that hit last summer had less of an economic impact than expected, in part because the states did not impose as severe lockdowns and because many households and businesses had adjusted to better deal with the pandemic.

“If you remember the summer wave last year, which was largely southern and western states, the economy just performed much better than anyone expected,” Powell said in a press conference following the Federal Open Market Committee’s two-day monetary policy meeting.

“What’s happened is that, first of all, many people are vaccinated and they’re getting on with their lives,” Powell said. “Secondly, we’ve kind of learned to live with it. A lot of industries have improvised their way around it.”

Powell pointed out that the housing market was able to recover much more quickly than other parts of the economy because many aspects of home shopping moved online.  Restaurants and even bars moved to take-out and retail outfits moved to contactless pickup.

“It seems like we’ve learned to handle this,” Powell said. “People would like to get back to the way things were. And I hope to some extent we will over time.”

Powell warned, however, that last winter’s big wave had large impacts on employment in hospitality and leisure. The economy lost about 500,000 jobs on a seasonally adjusted basis in the sector in November.

“A lot of jobs were lost because that was a very strong wave that happened just before the vaccines hit,” Powell said. “With Delta we’re just going to have to watch.”

Powell’s remarks echoed those of Donald Trump last October.

“Flu season is coming up! Many people every year, sometimes over 100,000, and despite the Vaccine, die from the Flu,” Trump tweeted. “Are we going to close down our Country? No, we have learned to live with it, just like we are learning to live with Covid, in most populations far less lethal!!!”

That prompted a surge of criticism from the Establishment Media and political rivals of Trump. The Associated Press fact-checked the president’s opinion, describing it as “faulty.”

Twitter hid the president’s tweet behind a warning label on it, saying the post “violated the Twitter Rules about spreading misleading and potentially harmful information related to COVID-19.” The company said it would not remove the tweet because “it may be in the public’s interest for the Tweet to remain accessible.” Twitter later suspended Trump’s account. Facebook deleted Trump’s comment on its platform.

Powell’s comment did not compare covid to the flu, so the analogy is not perfect.

 

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