This May 22, 2020 photo shows the Federal Reserve building in Washington. (AP Photo/Patrick Semansky)
By Martin Crutsinger
he Federal Reserve is promising to use its “full range of tools” to pull the country out of a recession brought on by a global pandemic, signaling that it would keep interest rates low through 2022.
In its semi-annual monetary policy report to Congress, the central bank said Friday that the COVID-19 outbreak was causing “tremendous human and economic hardship across the United States and around the world.”
In response, the Fed said it's “committed to using its full range of tools to support the U.S. economy in this challenging time."
The Fed’s report comes two days after a policy meeting where the central bank kept it benchmark interest rate at a record low of zero to 0.25% and signaled that it planned to keep it there through 2022. The Fed said it would continue to buy billions of dollars of Treasury and mortgage-backed securities to support the financial market.
Federal Reserve Chairman Jerome Powell will testify before congressional committees for two days next week, starting Tuesday, on the new report. Lawmakers are expected to ask Powell to explain how the central bank plans to further support the economy during what is expected to be the steepest economic downturn in the last 70 years.
Powell predicted this week that the recovery will likely be slow with Americans “well into the millions” unable to get their old jobs back.
Powell’s downbeat assessment of how long it could take labor market to recover along with other renewed fears about the pandemic’s impact on the economy helped trigger a huge selloff in the market on Thursday with the Dow Jones industrial average falling 1,861.82 points or 6.9%.
After the market plunge, President Donald Trump sent out a tweet criticizing the Fed's views that a full economic recovery could take a long time.
“The Federal Reserve is wrong so often,” Trump tweeted. “I see the numbers also, and do MUCH better than they do. We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021.”
The report submitted to Congress this week included economic projections from Powell and other top Fed officials. They showed that Fed officials expect a steep drop in economic growth of 6.4% this year with unemployment remaining at a sharply elevated 9.3% through this year.
A recently as February, unemployment was at a half-century low of 3.5%,
The economic projections showed that the Fed's key interest rate, which the central bank cut in March to a record low near zero, is expected to remain at that level through the end of 2022 with only two of the 15 Fed officials expecting a rate higher than zero by late 2022.
The Fed did not announce any new policy initiatives at its meeting this week, but financial analysts believe that those could be unveiled later this year, depending on how the economy performs in the second half.
The Fed noted a sharp deterioration in the labor market with nearly 20 million jobs lost since February, “reversing almost 10 years of job gains.”
“The most severe job losses have been sustained by the socioeconomic groups that are disproportionately represented among low-wage jobs,” according to the report.
The Fed on Friday also summarized a series of events that it has been holding since last year aimed at getting public input into improvements the central bank can make in its monetary policy work. That included an event in May in which it sought to determine how the coronavirus was impacting people's lives.
“People have put their lives and livelihoods on hold during this public health emergency,” Powell wrote in an introductory note. “While all of us have been affected, the burdens are falling most heavily on those least able to carry them.”
The Fed, Powell said, remains focused on laying the foundation for a return to the strong labor market the country was experiencing last year.
Cheddar's Big Game Special gives you all the info you need heading into Sunday's event. Pro Football Hall of Famer Terrell Davis, Big Game MVP Hines Ward, and Big Game Champion Emmanuel Sanders dissect the action set to take place on the field, Olivia Harlan Dekker delivers her winning wagers, Tom Morton breaks down what we should expect from advertisers, Azia Celestino showcases the atmosphere from Los Angeles, and Baker Machado discusses what viewers should expect to see unfold during the halftime show.
As the Cincinnati Bengals and Los Angeles Rams prep to face each other in the Big Game at SoFi Stadium in LA, 55 percent of a record number of bettors are projected to drop money on the Rams. Casey Clark, the senior vice president of strategic communications for the American Gaming Association, joined Cheddar News to share some data and predictions based on the greater interest in gambling on Super Bowl LVI. "You know that means that people are migrating away from the predatory illegal market and corner bookie and moving their action into the legal marketplace," he said. "So really encouraging for consumer protections and for those of us who might want to have a little action on the game."
Facebook parent Meta and Grammy Award-winning singer Ciara have joined forces to help black female-owned small businesses. Selected businesses will receive marketing mentorship from Meta along with $100,000 to put into their brand. One such business, The Self Care Suite, is a platform that supports mental health, and founder Tara Pringle Jefferson, along with Irene Walker, Meta Elevate founder and program manager, joined Cheddar News to discuss the program. "Having this opportunity with Meta, with Ciara, really will allow us to focus on our virtual programming, to focus on our e-commerce shop, and, as we kind of adjust, to the new normal in 2022," said Pringle Jefferson.
Tesla has been under mounting regulatory scrutiny by the NHTSA, and has issued numerous recalls, including four within the past two weeks. While the company has issued recalls over the years, the number seems to be increasing in recent months as the company issues fixes for seat belt chimes, pedestrian alerts, its self-driving software, and more. What's behind this uptick in recalls — and how might this impact brand loyalty? Al Root, Senior Writer at Barron's, joins Closing Bell to discuss.
Under Armour released a successful Q4 earnings report amid supply chain issues. The apparel company said it invested in analytics to decipher what drives consumers to its brand. However, the company warned of potential supply problems going forward due to COVID.
Hyperice is a technology company that specializes in physical recovery for athletes, and it's now partnering with the NFL. Christian McCaffrey, Carolina Panthers running back and Hyperice athlete-investor, and Jim Huether, Hyperice CEO, joined Cheddar News to discuss the partnership. "It's definitely for both for performance and for recovery, as somebody who plays a brutal sport and have to go through some of the unfortunate realities of injury," McCaffery said of the products. "You're always fighting for that 0.1 percent difference between winning and losing and and the little things and every second matters."
Aurora Cannabis showed a beat on sales for its quarterly earnings report, a positive sign despite a loss of $59 million. CEO Miguel Martin, joined Cheddar Movers to discuss its latest earnings and prospects for future growth. "If you look at our core businesses, they've all had a great quarter, so steady as we go. Our transformation plan is absolutely on track and we feel really good about where the company's going," he said. "Our balance sheet has never been stronger." Martin also discussed entering the U.S. market and the prospects for the medical marijuana market.
Elon Musk announced that he expects Starship to reach orbit in 2022. The SpaceX CEO delivered updates about the largest space vehicle to be constructed from its Texas facility. Jim Cantrell, CEO and co-founder at Phantom Space, joined Cheddar News to talk about the future of Starship. "I've always done wrong by betting against Elon," he said. "The one thing that I find very curious is it launches 100 metric tons into space, and last year, in the entire year, we launched 750. So, you know, with about seven launches, he could launch every satellite on Earth."
