Powell cautions it’s “not yet time” to dial back the Fed’s efforts to prop up the economy BUT perhaps soon.  Interest rates to remain at rock-bottom levels.

Federal Bank Monitoring Economic Recovery

At its annual economic conference usually held in Jackson Hole WY but zoomed instead due to the Delta variant on August 27, Jerome H. Powell, Chairman of the Federal Reserve, said that the economic recovery is “progressing” from impacts of the pandemic recession and that policymakers are considering when “taper” its bond-buying program…but “not yet.”

Powell’s most definitive statement was that policymakers were continuing to monitor the situation.

Labor Market Roaring Back

Though employers have been on a hiring spree by adding 1.9M jobs during June and July, the labor market is still shy -25% or -6M jobs compared with pre-pandemic levels.

Industry experts are optimistic that job applicants will spring to life this fall as children return to in-person classes and supplemental unemployment benefits end throughout the country.  The big “if,” however is the Delta variant.

Powell sees the Delta variant as a “near-term” risk. He also believes, “…the prospects are good for continued progress toward maximum employment…” a top priority for the Fed has stated many times over since the onslaught of the COVID pandemic.

Once again, real estate professionals, Fed officials want the job market to return to full employment BEFORE raising interest rates. Officials expect full employment to take until the end of 2023.

Inflation Roaring Back As Well

Policy makers and industry experts alike have been surprised by how much prices have jumped during the last few months.

The consumer price index (CPI) increased +5.4% y/y ending in July and matched June’s inflation rate…the highest in nearly 13 years.

The Fed more carefully watches inflationary data released by the Bureau of Economic Analysis (BAE).  On August 27, the BEA indicated an inflation rate of +4.2% y/y ending in July, up from June’s +4.0%.  Fed officials expect this separate inflation measure to drop to 3.4% by the end of this year and to 2.1% in 2022.

Thanks to National Public Radio and The New York Times.


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