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Fed Data Shows The Poor Were Hit The Hardest

Hit The Hardest
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EDITOR NOTE: We know that the poorest of American society, particularly minorities, were hit the hardest financially by the pandemic. There are too many reasons why this happened--from financial literacy (a big one), education level, the types of jobs they held, and the size of their households. A good portion may be attributed to their financial handlings, and a lot of it had to do with bad luck as well. But what the Fed fails to acknowledge is its role in transferring wealth from the poor to the wealthy. People who had large stock holdings got great paper returns that outpaced inflation. Everyone else got inflation, a claim to their future income (via federal spending), and more. We’re not sure any institution, let alone the Federal Reserve, is equipped to tackle these issues which now have become a Fed mandate. Perhaps a good start would be for the Fed to restrain itself from intervening with the dollar, and for the government to stop taking from the future wealth prospects of its citizens by spending more than it has.

Federal Reserve Chairman Jerome Powell on Monday gave a sneak peak at new data that clearly shows how “those least able to bear the burden” of the pandemic were hit the hardest.

Twenty percent of adults without college degrees suffered layoffs last year versus 12% for college-educated workers, Powell said, citing data from a new report on household economics to be published later this month.

More than 20% of Black and Hispanic “prime age” adults were laid off compared to 14% of similar white workers over the same period, he said, in a speech to the National Community Reinvestment Coalition.

Some 67% of Asian- and Black-owned small businesses and 63% of Hispanic-owned firms had to reduce operations compared with 54% for their white counterparts, Powell said.

While 22% of parents were not working or working less because of the pandemic, that figure was much higher for Black and Hispanic mothers — with more than 30% affected in each category.

And labor force productivity declined around 4 percentage points for Black and Hispanic women compared to 1.6 percentage points for white women and 2 percentage points for men overall.

“The Fed is focused on these long-standing disparities because they weigh on the productive capacity for our economy,” Powell said.

“We will only reach our full potential when everyone can contribute to, and share in, the benefits of prosperity,” he said.

On the big economic picture, the Fed chairman did not say much, but he sounded a bit more optimistic about the outlook than at his regular press conference last week.

” We are not out of the woods yet, but I am glad to say that we are now making real progress,” Powell said.

The U.S. economic outlook “has clearly brightened,” he added.

“Vaccination levels are rising. Fiscal and monetary policy are providing strong support. The economy is reopening, bringing stronger economic activity and job creation,” he said.

Last week, Powell said it was not time for the Fed to start discussing tapping the brakes on policies supporting the economy, even with signs of progress in the outlook.

Two other Fed officials Monday said it is not yet time to talk taper.

Original post from MarketWatch

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