tv Federal Reserve Chair Powell Discusses World Economic Policy CSPAN April 9, 2021 7:07pm-8:01pm EDT
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>> next a discussion about economic policy with global financial leaders including federal reserve chair jerome powell. the discussions 50 minutes. begins with remarks by imf managing director kristalina georgieva. >> it is great to be bringing some good news. we had great growth productions of the world of 6%. it's on the basis of three things. number one, vaccinations, to his measured economy and the stimulus unites ace most regionally did that. and three, we have all learned to function with the pandemic still around us. in other words lockdowns do not cause the same decreasing economic activity. but, there are two things to watch. one, the virus is mutating and still roaming around the
world. therefore we have to concentrate on vaccinations everywhere for everyone. a fair shot. two, we see dangerous divergence with a small group of economies in u.s., china, and couple of other emerging markets. moving levels by the end of this year and the rest of the world being behind vulnerable countries, tourism dependents, small islands they are all diverging the rest. that is been a big topic of our meetings, what can we do? my main point here is that i am extremely grateful to be a membership of the imf for committing to provide a big boost to reserve globally. billion-dollar special rights allocation it will help this
country that is falling behind the most. >> we will get to that i know there's news on that today and some of the other policies, fiscal, monetary and otherwise that can get us there. paschal donohoe they mentioned the vaccine first in terms of the recovery. did speed and strength of the recovery is a little bit of a wildcard. katie tells where you are a vaccination? and why has it been so much slower than expected? >> if you do not get the vaccination that is going to nothings going to improve. there's 20 million vaccines but sadly it's april expected to be 100 million vaccines. the goal of the european union has vaccinating 70% of our adult population by the summer as we get there.
at the start of the process due to the unions there were centralized something new for us. which was a mass w vaccination. cosmic commission in the year. there's things we need to work there. we are working through them. emily got for example to the summerer we deliver the targets we separate that will create the foundations for next year. being able to supply billions of vaccines you have across the european union. were making progress that's the reason for optimism to make progress in the face of challenges described a moment ago. >> and bigger challenges of
vaccine and equity. how long you think is going to take to global herd immunity we can all return to normal life. >> well thank you sarah. if we continue with inequality that we have now it will take aa long time. because you have to look at the numbers of the vaccines that have been distributed -- administered safari 0.1% have gone to countries about 86% to high and upperer middle income countries. so if we don't do something to change the pace at which they get access to vaccines is going to take a long time to get immunity for the world. this is in the self-interest
of everyone. every country. because we know as the managing director kristalina georgieva said, we do not act fast him at the rest of the world that might be vaccinated see it reversed. i think we'll take a long time unless we do something to reverse the inequality and allowing better manufacturing access to developing countries. distributing capacity wider than we have now. >> chair powell the u.s. is going fast and is the driver of optimism in the global economy right now thanks to three pharmaceutical companies. thanks a lot of stimulus and you and your team the federal reserve. just got ot a great job support a record services number. how strong of an outlook of a rebound are at for this year? >> thank you sarah. there are a number of factors
coming together to support a brighter outlook for the u.s. economy. which looked like faster recovery in economic activity and job creation. i point to substantial support vaccination moving quickly and on track for a full opening of the economy fairly soon. we vaccinate least over 100 million americans have had at least one vaccine. over 60 million are fully vaccinated were doing like 3 million per day per that's moving right along. and of course monetary policy is still supported. we got a taste of what passed her progress will look like with the march employment report cluster million jobs, particularly if you add in revisions for january bye-bye. we went to see a string of months like that so we can really be under show progress towards our t goals. the recovery though he remains uneven incomplete. the burn is still falling a lower income workers. the employment rate in the bottom is still 20% for their cell eight and half million people out of work. and this unevenness that we are talking about his a very serious issue.
viruses are no respected supporters. until the world really is vaccinated, we are all going to be at risk of new mutations. we will not be able to really resume activity with confidence all around the world. d pleasantly the right thing to do is a smart thing to do asr the director general just said. >> when you think about, chair powell the progress you want to see pretty mentioned number of economic indicators. do you pay attention with the globe with the three other panels were just describing the speed of vaccination, the speed ever covers? they're not doing as much on the physical front as we are here in the united states. does that matter for how faster going to start the exit strategy question mercer talk about tapering with normalization? >> what we have said a better asset they would continue at the current pace until he sees progress towards our goals.
not looking at forecasts i would look at global estateso risk to weigh in and something we track very carefully of course and call out as a risk. there's a risk in the united states as well. cases are moving back up here. i would just urge the people do get vaccinated and continue social a distancing. we do not want to get another outbreak even if it would have less economic damage and kill fewer people, it will slow down the recovery respect managing director, how long should central bankers like the fed chair stay in this emergency support mode? >> central bankers and authorities in this crisis they acted swiftly, decisively
and on a large-scale globally we have had $16 trillion of fiscal and the equivalent of $10 trillion in what central banks have done that has helped that should be continued with a durable exit from the health crisis. why? because premature withdrawal of support can cut the recovery short and that would mean all of the benefits we have built could potentially be lost. how to make two plays. one is to recognize this year, next her, vaccine policy is economic policy.
it isn't even even higher priority than policy, why? we cannot turn the fate of the world's economy around. as chair for powell said smart policy. we calculated between now and 2025 we will add $9 trillion to global output if everyone is vaccinatedto faster. and the other interesting peace of this is 60% will go to the emerging market economies. the benefit would go to advanced economies and that would translate to $1 trillion additional tax revenue in advanced economies. i cannot think of a better value for money this and next
year then investing in accelerated vaccination. and only then, chair powell can think seriously about hesitant strategy. which by the way it's meant by the united states and the rest the world. strong growth in the united states have positive spillover impact. by the same token it is a gradual change in financial conditions in the world. that may come from countries that are falling behind. this multi step recovery bears some risk of financial stability. put an end to the health crisis. >> were taught about the three pillars of fighting the pandemic and the economic pain that is out there. we talked about vaccines in europe. have they also been innovative when it comes to its policy
and pledge. or it. and then there is fiscal policy. heather has been some stimulus there. but not as much as the united states and i know you hate that comparison. they can still do more and why haven't you gone bigger onn that front? >> well, thank you. of course it is always by oval to make comparisons which might give them parts of the world are doing. we can learn from each otherndr can calibrator efforts we can look if we are all doing enough. if you look at the figures for last year indicated the united states was involved in discretionary skull stimulus measures. i provide 10% of the national income. at the same point was measuring about 8% of our national income. so there was a difference and that has to be acknowledged. in addition to that we would have function systems within
the european union that be providing payments to many of our citizens automatically. that also played a really important role in supporting the european economy across 2020. hopefully look at 2020 in the period ahead, there are many things happening in europe at the moment that will be at the heart of our recovery. we have the recovery and resilience fund. as you know the fund is a very, very large expenditure in grand program commonly formed by the european union. the kind of initiative that before the pandemic was unthinkable. that's going too be happening later on this year. and men are states have the initiative within the european union by their own divisions. so that combined with a vaccination program, which is accelerating as we speak. both mean this year end next
are you will see europe move ahead.d. you will see our recovery at a new pace. until then we have to be very conscious, has we are, of the global responsibilities that a been switched on on how europe can continue to contribute to those responsibilities. >> directorns general trade contracted 5% last year sharp drop for global trade. what he expected this year because of her starting to see the slow recovery? how strong is a bounce back? >> well thank you sarah. yes the trade contracted last year actually less than we thought. i would like to say it has been quite resilient. if knowing fed issues with export restrictions and prohibitions, you can see during the pandemic supply chains were resilient. in spite of the contraction of
trade we had trade and medical supplies up by 16%. and trade in supplies of protective equipment up 50%. i think trade has contributed to mitigate the effects of the pandemic in some ways. but of course they could do more. the good news shows trade will be up b by 8% this year. within that there is considerable divergent. we see import and export in north america and asia rebounding quite quickly and faster than say sub sahara africa and the middle east. so the diversions we see in recoveries reflected in the divergence and trade. this is partly due to the fact the rich countries have been able to issue more stimulus. i think it's about 21% of gdp
stimulus and richer countries compared to 6% for emerging markets and 3% for low income countries. that has also had something to do with the way the weakness in some of the regions in terms of economic rebound. but trade we hope can contribute more. first you making vaccines more available by lowering export restrictions. working with manufacturers to up volumes. and get more of the vaccine around the world. and secondly i think a strongon multilateral trading system contribute so much of the international recovery, much c more then one would have expected. >> chair powell diversions is the panel so far even in the u.s. which is growing strongly t and quicker than the rest of the world there are some diversions, it is not equal by race, by gender, by sector.
you been focused on this, i've heard you talkit about at the news conferences. which parts were worry you the most and can you do anything about it? spackle is so unusual about this event, this pandemic event was that it hit companies that were in the service industry that faced the public with a lot of public interaction.ho and the people who lost their jobs to the biggest extent or relatively low paid service workers and trash pension travel leisure hotels things like that. those people tend to skew towards minorities, toward women, have lower paid and less in the way of wealth to fall back on. they are a very large portion of the burden. as i mentioned the unemployment rate under the bottom tile of workers and still 20% for the higher and the labor market has virtually recovered. but not for people in the bottom 20%.
we've been very concerned about this from the beginning. that amounts to nine or 10 million people depending on how you count it or working in february 2024 now unemployed. they were in the workforce, they clearly what to be working but they are not.or and we will not forget those people. will provide the economy the support they need until that job is done. the real concern now his longer-term unemployment can allow skills to atrophy or connections to the labor market to dwindle. they've a hard time getting back to work. also, it's important to remember were not going back to the same economy. this'll be a different economy. one of the things we hear from companies as they spent a lot of time since he pandemic arrived looking at ways to have more effective technology and perhaps fewer people. you're going to see some of that in this public facing jobs. there will be millions of people who have a hard time finding their way back into the workforce and recovering the lives they had just a year
ago. i think it would be appropriate for us to continue to support this people. what we call labor market scarring when people been out of work for a long period of time record shows her whole economic lives in frankly their broader lives of human beings can be damaged even permanently. want to avoid that. i would say we have avoided a great deal of it. the really bad outcomes of areea concerned about a year ago have not materialized. nonetheless nine or 10 million people out of work. we need to keep supporting them in supporting the economy and we will. >> managing director to join to say something about the scarring for the unequal nature of the recovery we are seeing? >> it is very clear that within the country and across the country the pandemic in this crisis are very different. it is low skilled workers, women, and
unfortunately young people who entered the labor market at the time the economy is in the recession. they were most severely hit. chair powell said the sectorse not only are being depressed now, but some of them would find it hard to come up. and then comes the second scarring that is related to small and medium size enterprises. this to be the larger companies. what we seeing in our research has very high probability that once support is withdrawn, we will see companies that are pretty much on life-support and many of these will be likely more severely impacted. meaning that one in ten jobs
may disappear. so the question is, what should we do? first, it is critical when we draw support at the same time lifted up to help people reach skill and re- profile. move from shrinking sectors to those that are expanding. and i want to give two examples that are expanding activities. with more attention to the climate crisis. and more investments goingy. into the economy. there are opportunities for job creation. just take for examplexale renewable energy. seven jobs to one in the traditional energy sector that would require training and
support. similarly reforestation, taking care of land, resilience to shocks these aree all labor-intensive activities. we need to think about it now so we are able to support a tradition of people. in the secondd issue of course is how we make sure that there is sufficient attention paid to a vibrant small and medium size enterprise sector. and that is more about how access to finals will take place. we are going to have a different economy. it does not mean we think wellin advance you think about flexibility with people
entering the labor market. and if you think about where growth is going to come from. in the united states there is now a lot of discussion about infrastructure including green infrastructure. this is very positive because we had to have not only support through the crisis but also the momentum for the recovery in the european union that makes the generation yields with the same objective. : : n the record supporting president biden'
>> what could be a part of this with the projections for the united states, and broadly speaking. >> don't worry, minister, how are you tackling these issues. you mentioned the recovery fund, which, of course coming is a huge component of green infrastructure. how are you thinking of building the economy to serve what we are talking about in and the workers that have been left behind? >> well, thank you, i think that the first step is to recognize the challenge that we have.ha as i look at it from the european perspective, across the timeframe of the pandemic so far, we have seen unemployment levels within the u.s. go up ane average i .5%.
but if you are a young person, the unemployment rates have gone up by 6%. and if you are a woman, we have seen the unemployment go up by 9%. and it really does illustrate just how powerful today's impact of the pandemic is at the moment and that determines how we respond back to something that is deeply rifting inequality. the first is the responsibility that we have too look to protect income, particularly that of the most vulnerable at a time that the pandemic is having such an impact in our society across europe and also within america, a huge focus on how we can do that. then secondly to build on the point made a moment ago. we do have to recognize that when we are looking to prioritize on this digital
transition and we have to be aware that they will respond back to that and might not need automatic. losing somebody, or example parts that could be renewable. and that includes a the policy point of view and to focust on trading, to focus on how we ensure that we don't confuse a rebound and the need to continun to support positive change within the economy.
>> when it comes to the global outlook, which is inflation, the individual is really eager to hear from you on this. because the german ss about thie a lot but says what we are going to see is going to be transitory. a lot of what is happening is coming as a result of supply chains, global chip shortage, a lot of things that you you're probably monitoring. can you bring up to speed of the impact of what we are going to see and what it will do the prices globally? >> well, thank you so much, sarah. yes, you know, i just want to touch on this and what has happened with the supply-chain and it shows you how important the supply chains are. including how it first came out for a couple of days and actually held up supply chains
around the world. it held up production. so this is very important, what we are seeing is that as developed countries that are performing better than the economies are doing much better, we see a lot of shipping and goods, going in that direction. and of course, in terms of shipping containers, there is an indication of how supply continues to be good and how itv is going to developed countries, goods and a shortage of many goods moving around, it is part of the difficulty that we are going to see as we move forward
looking at a supply-chain globally. so how this has moved is going to impact us on what happens to inflation in the different parts of the world. and so hopefully as we are projecting that everything will rebound this year, we hope that this kind of a movement will make sure that the supply chains perform the function in terms of making sure that goods are supplied on the world in terms of production. >> you talk about inflation coming being transitory. so it was referred to as transitory. but a lot of people would like to know what this transitory mean, how long is it, how high he would be too high for us to tolerate it if of inflation? and you just expand on that we
not. >> yes, and let me beet very clear, there is a difference between essentially a one-time increase in prices and persistent inflation. when we say inflation, that is what we mean, inflation that goes up by two to 4% or whatever it is you're after year. that level of inflation tends to be dictated by underlying inflation dynamics in the economy as opposed to things like bottlenecks. so the nature of a bottleneck is that it will be resolved, that the supply side will adapt and therefore whatever costs people have c to bear and supplies are temporarily tighten as the economy reopens, but those would be repeated next year. we do not think that they would be repeated. we would think that the supply-chain would adapt and become efficient, but that will happen. that isen essentially what we ae currently saying. remember, sarah, we've got 25
years of inflation dynamics, roughly 25 years, where inflation has been low and many advanced economies around the world have been unable to reach 2% and some are actually fighting off inflation, and that has been a dominant. sort of set of dynamics for some decades now. and now we have a situation where the economy is actually reopening, there will be a surge in demand possibly, bottlenecks possibly, but it's still unlikely that will change the underlying inflation psychology that has taken some deep roots over the course of many years, so we think that there will be an upper pressure on prices which could be passed on to consumers in price increases, but let me say that there is no certainty in this. so inflation expectations could move up materially in a way that suggests that they were being
anchored and it can move well above 2%. we could react. one of the two mandates is price stability and the other is employment. we do have the tools to deal with that outcome and we will use them to guide inflation back to 2% if the need does arise. then the most likely case, this timeframe time frame will show the temporarily high prices for nonpersistent inflation. >> what would you do? >> that is the principal tool that we have. the traditional tool is to restrain the economy and reduce inflation that way. and again, we don't think that that is the most likely outcome, but it is the playbook of inflation were countered to move meaningfully above what we are comfortable with.
these days people think that inflation is largely a a functin of what the public expects them to be, and we would be monitoring expectations very carefully if we see them moving persistently above levels that we are comfortable with, then we would react to that. >> what is going to happen to the global economy when the chairman is ready, which he's making very clear and ready to talk about this. you reference this, but clearly the rest of the world is watching and feeling it. >> to the extent that we are researching what is happening to the united states, we subscribe to our expectations like here. and when we talk about a fun and
expectations for inflation, exhibit is the right word, then there would be an impact on interest rates and education directing the rest of the world, especially for economies and businesses that are highly leveraged and we have seen the interest rates jump as a result and that is why we are taking steps to communicate and being very helpful to hold this expectation and also for the rest of the world to be clear around many places in the united states. let me make two points on inflation. one is that we are actually more
concerned about inflation in the emerging markets in the countries where the monitoring has been taking place because of the limited discourse space and the need to support the economy. this is why it is so important for international and national institutions to be there for this country, although they do not need to fall back on automatic financing. some of them for the first time are using this. and this is a delicate instrument to apply and for that reason we are watching carefully what is happening in the emerging markets. the second part of inflation is
that halting inflation and holding it back is allowed. allowing goods and services to produce and have his prices around the world held down. and i feel strongly that we all need to support this in these rules to reform the trade system so we can deliver what we have successfully been delivering in a world where we can all enjoy improvements and standard of living because of getting the benefits of labor. >> that is a perfecte. segue. between the u.s. and china, there is still a big question mark over a trade deal between the two largest economies, what is going to happen with that under your leadership,
generally, how are you going to open trade more? i feel like they have had a rough time frame in the administration here. >> well, thank you and yes, we all know that open and transparent and fair are important and what is the best for the whole world. and that includes how it can help both china and the united states and the united states to solve some of these problems and the difficulties between them. although we hope that some of these, particularly maybe we can come to some negotiation solutions that would be outside of it.
and so solving these problems including boosting trade around the world so it is important with what happens with other countries and so what we need to do c and trading systems so that countries can once more have a recall for where they can go for energy disputes around central trade rules that are going to be strong for the world. and there has been a paralyzed situation for some time and
members can come and that is one area where we really need stronger form including in support of all the members, the u.s., china, the eu, developing countries as well to make this work. and i think that they also need to reform the 21st century issues. and that includes the digital economy. this is one area where the world is moving very fast to drive trade for the foreseeable future. and so to strengthen those rules is very important that help out with inclusion and women as well
that have been been a part of the pandemic. these are all areas that need reform. and finally trade can contribute so muchh to issues with what is going on in the world. we need to build rules that are going to help in the system. also challenges where big countries and small countries now agree on new rules and it is going to be tough. >> we have been talking about all of these issues that could infect outlook of inflation and trade, we wanted to get your take on politics and europe in particular because angela merkel is retiring after 16 years, and
that is paramount for europe, what is going to happen? >> well, i am very optimistic aboutt it to continue to be able to respond to the challenges in making our contributions towards a better world than we would like is some important actions coming up, what is happening in germany and france. but with the elections that are taking place, looking at the change in both cases that we have seen how we are very
committed and also what we have thseen and place such a valuable role including how we can have new things to do. and so for example we have the sure program, and that includes paying the wages of 25 and 30 millionli of european citizes during the time of the pandemic and that shows political stream behind this response on so many other things and i am hopeful that it will see this dynamic at lease be in place in the years to come. >> since we are in the 2022, your term is up in
february 2022. are you going to be the one to execute this massive challenge of a policy? i don't know if that's normal or not that you haven't had any calls withot president biden afr your engagement with the last president. >> i have another massive challenge and that isas to do my job every day as best as i can to serve all of the american people that we are so fortunate serve. and i spent ag lot of time thinking about how we can do the best job that we can. >> i would like to get everyone's thoughts, the biggest risk to this outlook, we talk about how you feel about these issues, what keeps you up at night when itht comes to the net year or two in what could go
wrong?ly >> well, the virus is the big unknown. what keeps me up is the transformation toward inclusive society and how we are going to deal with the threat ofit inequality and from history we know that when a pandemic had, the quality goes up and can we do differently this time around. can we strengthen the support of people in education, social safety net, so people are resilient and can we do the
right thing and can we continue to build the strength of our economy. and taking it to a great degree as part of it because that is part of it. can we have the same relations, can we build the resilience of people and planet and this is what makes me dream positive dreams. >> so yes, we have talked aboutc the pandemic. and we have always tried to avoid that happening again.
and i'm going to wake up tomorrow and we are going to talk about three different kinds of and connections. how many people would do so so that they might day by day would be able to beat this disease and then also for investment that we need to still have available to again lead the economic foundation and really with a particular focus on the youngest who are paying a heavy toll for who are in place. so again, i just want to speak about what the managing director has talked about, and also we have to be aware of the positive things that we can achieve and how much we have achieved collectively over thehe last yer with this pandemic and how much more we can still achieve.
including a time that we are talking about. >> so what about you, what do you think is the biggest risk factor toor this outlook which u have laid out? >> well, let me -- i have a couple of things that keep me awake at night, one is trade related and the other one has to do with low income countries. so the fact that some don't have access to vaccines, like i said in the beginning. and then the continuation of the divergence of economies from the rebound of the other, that the other economies are having, that is a very difficult thing, but i
hope when it comes to this that they are working very hard to make sure that it's reallocated to the most vulnerable countries that need it. and we also have the debt burden. which has not allowed them to be a part of the stimulus of their country as others have in other countries. so i would like to talk about a strong word of praise, particularly with my countrymen, because there are very strong measures, they suffered a lot from the pandemic. and you have a lotha of people d they still did the right thing.
and we need to realize that we have two the out of the crisis that we are in. including half of the world being left behind, and that is what we are directly referring to. so that we can all begin to converge in the right direction. and so that is one thing. i think the second thing, the second has more directly to do with missing the opportunity for the members to really come together and to agree upon the rules, those digital innovations in the economy that are happening right now, like the
digital economy. we can't get away from it, so my hope and my expectation to avoid a nightmare is that we would be able to make the right move. so i'm guessing we will also be able to make room for the green economy and also for inclusion, as i said before, how we are going to get the rules and make sure that these are included in the global supply chains of the world so that tradede can really play the role that it needs tods play for the economic community. >> finally, nightmares. what keeps you up? >> i would first like to mention the nine or 10 million. i think of those people that are trying hard to give back to thet lives that they had an back to work, you may notice that there is a substantial thing and we
need to it remind ourselves that although some parts are doing great, there's a large group of people that are not doing so great and they really want to get back to the economy. and the last thing i will mention is that generally i think we focus way too much on the short-term as well as pallets of measures and not on longer-term supply measures, and in other words i think we really is a country, and i'm not talking to any particular bill, invest in things that will increase the inclusiveness and the i longer-term and the potential of it. particularly investing in people so they can take part and contribute to and benefit from the prosperity of our economy. >> can we do this in person next year? >> i very much hope that the answer is yes.
and we will be here, all of us together. >> that is the best way to end it, thank you so much for a lively and topical conversation. and thank you to our panelists and the audience, have agreed evening. >> c-span2 is your unfiltered view of government. funded by these companies and more. ♪ ♪ ♪ >> support c-span as a public service along with these other television providers. giving you a front of seed to democracy. >> coming up next, the 10th day of testimony in the