Economic Instability May Lead To More Income Inequality
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The Guardian Reports: Fed chair says US economy faces ‘significant uncertainty’ and fears wider income inequality
The Federal Reserve chair, Jerome Powell, said that the US economy faces "significant uncertainty" in future months. He also said that the recession as a result of COVID-19 could worsen the income gap for minorities and persons of lower socio-economic status.
Powell said in testimony presented to the Senate banking committee: “Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it. Until the public is confident that the disease is contained, a full recovery is unlikely.”
The Fed chair stated that unemployment has disproportionately impacted low-income workers, minorities, and women. Therefore, the recession has only exacerbated existing inequalities.
“If not contained and reversed, the downturn could further widen gaps in economic wellbeing that the long expansion had made some progress in closing,” Powell said.
Powell argued that Congress must provide more aid to American citizens to prevent this dire situation from becoming worse.
“The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures,” said Powell. “The Cares Act and other legislation provide direct help to people, businesses and communities. This direct support can make a critical difference not just in helping families and businesses in a time of need, but also in limiting long-lasting damage to our economy.”
To read more about the disproportionate impact COVID has had on the Black community, read our memo here.
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