The Atlanta Journal-Constitution
Atlanta Fed’s Bostic says labor market crisis, not GDP, is focus
‘Our mandate is still full employment,’ central bank conference is told.
‘Recovery might feel like it is very present for many of us. For those at the bottom of the income distribution, they are still in deep crisis.’
Raphael Bostic
Atlanta Fed president
While U.S. growth is recovering quicker than expected amid the COVID-19 pandemic, the Federal Reserve is focused on supporting the labor market that is still in crisis after losing 10 million jobs, Atlanta Fed President Raphael Bostic said.
The remarks, from a voting member of the central bank’s policy-setting committee this year, reinforce the message that the Fed is not close to tightening policy even as the economy rebounds.
“Just to remind you, our mandate is full employment,” Bostic said Thursday during a virtual speech to the bank’s banking conference. “It’s not full GDP. It is not the size of GDP. So this disparity is something that is important and something we are going to have to continue to watch closely.”
The size of the U.S. economy measured by gross domestic product is down about 2.5% below its level of 2019, while employment is down about 6%, Bostic said, noting “the recovery is really in a rough patch.”
Federal Reserve Chair Jerome Powell told lawmakers this week that the nation was still a “long way” from the Fed’s goals for full employment and price stability, signaling the central bank will maintain ultra-easy monetary policy for some time despite hopes for a strong economy later this year as vaccinations spread.
That message has been repeatedly reinforced by other policy makers, including the sometimes-hawkish Esther George, president of the Kansas City Fed,
who said in separate remarks Thursday that “it is too early to discuss pulling back on accommodation given continued elevated unemployment, below-target inflation, and the uncertainties surrounding the outlook.”
The burden of the pandemic has fallen most heavily on the poorest communities and women, more of whom have left the workforce than men as families struggle with child care while schools remain closed due to the virus.
The pace of the recovery depends largely on the course of the COVID-19 outbreak and vaccinations, Bostic said, noting that labor market progress has stalled in the past few months as the pandemic has spread.
“The risk is disproportionately falling on those who are most vulnerable,” Bostic said. “Recovery might feel like it is very present for many of us. For those at the bottom of the income distribution, they are still in deep crisis.”
Minorities made impressive gains toward the end of the 10-year recovery from the 20072009 recession, yet “the COVID recession has fully reversed the labor market progress that African Americans have made late in the recovery from the Great Recession,” the Atlanta Fed chief said.