Updated at 4:37 p.m. ET
Federal Reserve Chairman Jerome Powell said the pace of jobs growth is rising faster than many people expected, but it may take years before the economy has fully recovered.
“I would say today’s jobs report was a good one,” he said. “Through May and June, we got quite a few people back to work.”
Powell also said the central bank isn’t ready to let down its guard anytime soon and interest rates will stay low for a long time.
“We think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time,” he said. “It will be measured in years.”
While many jobs have come back, as many as 11 million people aren’t back to work yet, including those in hotel, entertainment and travel-related jobs, Powell said.
“And in a sense, those may be some of the harder jobs to find because there are some parts of the economy that will take longer to recover,” he said.
Powell also said that following social distancing guidelines and wearing masks is essential to controlling the virus and getting the country back to full employment.
“There’s actually enormous economic gains to be had nationwide from people wearing masks and keeping their distance,” he said.
Under Powell’s leadership, the Fed has made unprecedented efforts to support the economy during the pandemic.
As state and local governments urged residents to stay at home and businesses to shutter in an effort to stem the spread of the virus, tens of millions of people lost jobs within the span of a few weeks, sending the unemployment rate skyrocketing to nearly 15% in April.
The Fed was quick to step in, devising a series of initiatives to pump trillions of dollars into the economy by cutting interest rates to zero and restarting a bond-purchasing program used during the Great Recession.
The central bank also took steps to make low-interest loans available to banks, money-market funds, state and local governments and businesses of all sizes.
Many economists say the Fed’s quick efforts have made the downturn less severe than it otherwise would have been, and unemployment has been gradually drifting downward.
But many critics say the Fed’s actions have helped Wall Street more than Main Street. The belief that the Fed stands ready to let the money flow whenever necessary has fueled a great rebound in the financial markets, sending stocks up to record highs since March — though major indexes dipped this week.
Unemployment fell to 8.4% in August, but job growth has slowed, the Labor Department reported earlier Friday. (Just before the pandemic hit the U.S. economy, the jobless rate matched a 50-year low of 3.5%.)
Powell’s comments come a week after he announced a major change in the Fed’s inflation targeting policies. Powell said the Fed would allow inflation to run above its standard 2% threshold before raising interest rates, potentially giving the economy more room to grow.
“Many find it counter-intuitive that the Fed would want to push up inflation,” Powell told the audience. “However, inflation that is persistently too low can pose serious risks to the economy.”