For much of the pandemic, Amazon has offered free on-site Covid testing for employees. It incorporated a variety of design features into warehouses to promote social distancing. But a worker at an Amazon warehouse in Oregon, who did not want to be named for fear of retribution, said there had been a gradual reduction in safety features, like the removal of physical barriers to enforce social distancing.
Kelly Nantel, an Amazon spokeswoman, said that the company had removed barriers in some parts of warehouses where workers don’t spend much time in proximity, but that it had kept up distancing measures in other areas, like break rooms.
“We’re continuously evaluating the temporary measures we implemented in response to Covid-19 and making adjustments in alignment with public health authority guidance,” Ms. Nantel said. She added that the company would “begin ramping down our U.S. testing operations by July 30, 2021.”
At REI, the outdoor equipment and apparel retailer, four workers in different parts of the country, who asked not to be named for fear of workplace repercussions, complained that the company had recently enacted a potentially more punitive attendance policy it had planned to put in place just before the pandemic. Under the policy, part-time workers who use more than their allotted sick days are subject to discipline up to termination if the absences are unexcused. The workers also said they were concerned that many stores — after restricting capacity until this spring — had become more and more crowded.
Halley Knigge, a spokeswoman for REI, said that under its new policies the company allowed part-time workers to accrue sick leave for the first time and that the disciplinary policy was not substantively new but merely reworded. The stores, she added, continue to restrict occupancy to no more than 50 percent capacity, as they have since June 2020.
Workers elsewhere in the retail industry also complained about the growing crowds and difficulty of distancing inside stores like supermarkets. Karyn Johnson-Dorsey, a personal shopper from Riverside, Calif., who finds work on Instacart but also has her own roster of clients, said it had been increasingly difficult to maintain a safe distance from unmasked customers since the state eased masking and capacity restrictions in mid-June.
David Gross, an executive at a New York-based advertising agency, convened the troops over Zoom this month to deliver a message he and his fellow partners were eager to share: It was time to think about coming back to the office.
Mr. Gross, 40, wasn’t sure how employees, many in their 20s and early 30s, would take it. The initial response — dead silence — wasn’t encouraging. Then one young man signaled he had a question. “Is the policy mandatory?” he wanted to know.
Yes, it is mandatory, for three days a week, he was told.
Thus began a tricky conversation at Anchor Worldwide, Mr. Gross’s firm, that is being replicated this summer at businesses big and small across the country. While workers of all ages have become accustomed to dialing in and skipping the wearying commute, younger ones have grown especially attached to the new way of doing business.
And in many cases, the decision to return pits older managers who view working in the office as the natural order of things against younger employees who’ve come to see operating remotely as completely normal in the 16 months since the pandemic hit. Some new hires have never gone into their employers’ workplace at all.
banking and finance, are taking a harder line and insisting workers young and old return. The chief executives of Wall Street giants like Morgan Stanley, Goldman Sachs and JPMorgan Chase have signaled they expect employees to go back to their cubicles and offices in the months ahead.
Other companies, most notably those in technology and media, are being more flexible. As much as Mr. Gross wants people back at his ad agency, he is worried about retaining young talent at a time when churn is increasing, so he has been making clear there is room for accommodation.
“We’re in a really progressive industry, and some companies have gone fully remote,” he explained. “You have to frame it in terms of flexibility.”
In a recent survey by the Conference Board, 55 percent of millennials, defined as people born between 1981 and 1996, questioned the wisdom of returning to the office. Among members of Generation X, born between 1965 and 1980, 45 percent had doubts about going back, while only 36 percent of baby boomers, born between 1946 and 1964, felt that way.
most concerned about their health and psychological well-being,” said Rebecca L. Ray, executive vice president for human capital at the Conference Board. “Companies would be well served to be as flexible as possible.”
Matthew Yeager, 33, quit his job as a web developer at an insurance company in May after it told him he needed to return to the office as vaccination rates in his city, Columbus, Ohio, were rising. He limited his job hunting to opportunities that offered fully remote work and, in June, started at a hiring and human resources company based in New York.
“It was tough because I really liked my job and the people I worked with, but I didn’t want to lose that flexibility of being able to work remotely,” Mr. Yeager said. “The office has all these distractions that are removed when you’re working from home.”
Mr. Yeager said he would also like the option to work remotely in any positions he considered in the future. “More companies should give the opportunity for people to work and be productive in the best way that they can,” he said.
Daily Business Briefing
Even as the age split has managers looking for ways to persuade younger hires to venture back, there are other divides. Many parents and other caregivers are concerned about leaving home when school plans are still up in the air, a consideration that has disproportionately affected women during the pandemic.
At the same time, more than a few older workers welcome the flexibility of working from home after years in a cubicle, even as some in their 20s yearn for the camaraderie of the office or the dynamism of an urban setting.
I get to exercise in the morning, have breakfast with my kids, and coach little league in the evenings. Instead of sitting in an office building I get to wear shorts, walk our dog, and have lunch in my own kitchen.” Chad, Evanston, Ill.
V.A. issues vaccine mandate for health care workers: “I am a VA physician and strongly support this decision. Believe it or not, I know and work closely alongside several frontline healthcare workers who are not vaccinated for COVID-19, almost all of whom have chosen to avoid the vaccine as a result of misinformation and political rhetoric.” Katie, Portland.
As China boomed, it didn’t take climate change into account. Now it must.:“I think this article really highlights the fact that capitalism is, and always will be, completely incapable of addressing long term existential threats like climate change.” Shawn, N.C.
“With the leverage that employees have, and the proof that they can work from home, it’s hard to put the toothpaste back in the tube,” he said.
Fearful of losing one more junior employee in what has become a tight job market, Mr. Singer has allowed a young colleague to work from home one day a week with an understanding that they would revisit the issue in the future.
doctrinaire view that folks need to be in the office.”
Amanda Diaz, 28, feels relieved she doesn’t have to go back to the office, at least for now. She works for the health insurance company Humana in San Juan, P.R., but has been getting the job done in her home in Trujillo Alto, which is about a 40-minute drive from the office.
Humana offers its employees the option to work from the office or their home, and Ms. Diaz said she would continue to work remotely as long as she had the option.
“Think about all the time you spend getting ready and commuting to work,” she said. “Instead I’m using those two or so hours to prepare a healthy lunch, exercising or rest.”
Alexander Fleiss, 38, chief executive of the investment management firm Rebellion Research, said some employees had resisted going back into the office. He hopes peer pressure and the fear of missing out on a promotion for lack of face-to-face interactions entices people back.
“Those people might lose their jobs because of natural selection,” Mr. Fleiss said. He said he wouldn’t be surprised if workers began suing companies because they felt they had been laid off for refusing to go back to the office.
Mr. Fleiss also tries to persuade his staff members who are working on projects to come back by focusing on the benefits of face-to-face collaborations, but many employees would still rather stick to Zoom calls.
“If that’s what they want, that’s what they want,” he said. “You can’t force anyone to do anything these days. You can only urge.”
McDonald’s is raising wages at its company-owned restaurants. It is also helping its franchisees hang on to workers with funding for backup child care, elder care and tuition assistance. Pay is up at Chipotle, too, and Papa John’s and many of its franchisees are offering hiring and referral bonuses.
The reason? “In January, 8 percent of restaurant operators rated recruitment and retention of work force as their top challenge,” Hudson Riehle, senior vice president for research at the National Restaurant Association, said in an email. “By May, that number had risen to 72 percent.”
Restaurant workers — burger flippers and bussers, cooks and waiters — have emerged from the pandemic recession to find themselves in a position they could not have imagined a couple of years ago: They have options. They can afford to wait for a better deal.
In the first five months of the year, restaurants put out 61 percent more “workers wanted” posts for waiters and waitresses than they had in the same months of 2018 and 2019, before the coronavirus pandemic shut down bars and restaurants around the country, according to data from Burning Glass, a job market analytics firm.
replace their face-to-face workers with robots and software. Yet there are signs that the country’s low-wage labor force might be in for more lasting raises.
Even before the pandemic, wages of less-educated workers were rising at the fastest rate in over a decade, propelled by shrinking unemployment. And after the temporary expansion of unemployment insurance ends, with Covid-19 under control and children back at school, workers may be unwilling to accept the deals they accepted in the past.
Jed Kolko, chief economist at the job placement site Indeed, pointed to one bit of evidence: the increase in the reservation wage — the lowest wage that workers will accept to take a job.
According to data from the Federal Reserve Bank of New York, the average reservation wage is growing fastest for workers without a college degree, hitting $61,483 in March, 26 percent more than a year earlier. Aside from a dip at the start of the pandemic, it has been rising since November 2017.
“That suggests it is a deeper trend,” Mr. Kolko noted. “It’s not just about the recovery.”
Other trends could support higher wages at the bottom. The aging of the population, notably, is shrinking the pool of able-bodied workers and increasing demand for care workers, who toil for low pay but are vital to support a growing cohort of older Americans.
“There was a work force crisis in the home care industry before Covid,” said Kevin Smith, chief executive of Best of Care in Quincy, Mass., and president of the state industry association. “Covid really laid that bare and exacerbated the crisis.”
more families turning their backs on nursing homes, which were early hotbeds of coronavirus infections, Mr. Smith said, personal care aides and home health aides are in even shorter supply.
“The demand for services like ours has never been higher,” he said. “That’s never going back.”
And some of the changes brought about by the pandemic might create new transition opportunities that are not yet in the Brookings data. The accelerated shift to online shopping may be a dire development for retail workers, but it will probably fuel demand for warehouse workers and delivery truck drivers.
The coronavirus outbreak induced such an unusual recession that any predictions are risky. And yet, as Ms. Escobari of Brookings pointed out, the recovery may provide rare opportunities for those toiling for low wages.
“This time, people searching for jobs may have a lot of different options,” she said. “That is not typical.”
In 2017, a study found that the average inbox had 199 unread emails. And here, almost 16 months into remote work for many white-collar employees, inboxes have only become more bloated.
But younger workers, who were disproportionately hard-hit by the instability of the pandemic, appear to be reassessing their professional priorities. And maybe they will really be able to do what the work of Mr. Newport — who at 39 is on the elder cusp of millennial — has not been able to do.
Harrison Stevens, 23, started a vintage clothing company while attending the University of Oregon and opened a brick-and-mortar location after graduating in 2020.He started giving clients his personal number and has them text or call him, which he says helps alleviate the load but introduces a new problem of not having clear work-life balance.
Emailing is “almost like a social anxiety people have,” Mr. Stevens said. “I think a lot of people find it easier and more convenient to send a text than compose an email. It almost feels like there are other eyes looking, like, I have to be so professional in this setting and make sure everything is perfect,” he says, noting that there’s something less formal about using your fingers and thumbs on a phone keyboard, rather than a computer keyboard.
For some people, adding texting can complicate communication, introducing multiple ways to be expected to get in touch with someone.
Aurora Biggers, 22, a journalist who recently graduated from George Fox University, said she used to give out her personal number but was getting so many texts that it was infringing on personal time. She thinks her generation is less inclined to use email as their main form of communication. While she likes the work-home boundaries that email offers, she said what she finds most difficult is that there isn’t one standard form of communication. The main problem with email then is not necessarily that there is too much of it, but there is too much competition.
“It’s impossible to expect email to be the main form of communication because so many people aren’t working office jobs or are sitting in an office with an email notification coming through,” she said. “I don’t think it’s the most relevant way to expect people to communicate with you.”
“It gave me a feeling of déjà vu, because that’s what we were doing in the ’70s — we were trying to get supply-side effects,” said Barry P. Bosworth, a senior fellow at the Brookings Institution who led the Council on Wage and Price Stability under President Jimmy Carter. The efforts failed to control overall inflation, he said.
“It doesn’t work,” he said. “As a macro policy, you can’t go around trying to put your finger in the dike everywhere it pops up.”
Wages: The trouble with spirals.
The big price spikes in the 1960s and 1970s reversed once the underlying conditions that created them eased. But not all the way — in each case, the rate of inflation bottomed out a bit higher than the time before. Many economists believe that pattern had to do with human psychology: Workers and businesses had come to expect a higher rate of inflation, and had adapted their behavior accordingly, creating a self-sustaining cycle.
Economists particularly highlight the role of wages. Businesses can cut prices just as easily as they can raise them, but cutting wages is harder. No worker wants to be told that a job that was worth $10 an hour yesterday is worth just $9.50 an hour today. And if workers expect prices to rise at 5 percent per year, they will want raises to keep up with inflation.
Most economists believe that the forces driving the current surge in inflationwill ease in the months ahead. The question is whether that will happen before expectations shift. Some surveys have found that consumers are already beginning to anticipate faster inflation to stick around, although that evidence is mixed. Wages, too, have continued rising as employers struggle to rehire workers, although it’s not yet clear that they are taking off.
One reason that temporary price increases turned into permanent wage increases in the middle of the 20th century is that many union contracts had escalator clauses that tied wage gains directly to inflation. Those provisions effectively helped lock in price increases, feeding into the price spiral, said David Card, an economist at the University of California, Berkeley, who has studied the role of union contracts in inflation. Far fewer workers are members of unions today, and few contracts have inflation clauses, in part because they haven’t been necessary in a period of low inflation.
Perhaps the largest difference of all? Time. In the 1960s, it took years of price spikes and policy failures for Americans to lose confidence that their leaders could keep inflation under control.
“What happened by the ’70s took almost 10 years to develop,” Mr. Card said. “I don’t think it’s that feasible that it could happen that quickly.”
“You can pull a less-skilled worker in and have them adapt to our system much easier,” said Ryan Hillis, a Meltwich vice president. “It certainly widens the scope of who you can have behind that grill.”
With more advanced kitchen equipment, software that allows online orders to flow directly to the restaurant and other technological advances, Meltwich needs only two to three workers on a shift, rather than three or four, Mr. Hillis said.
Such changes, multiplied across thousands of businesses in dozens of industries, could significantly change workers’ prospects. Professor Warman, the Canadian economist, said technologies developed for one purpose tend to spread to similar tasks, which could make it hard for workers harmed by automation to shift to another occupation or industry.
“If a whole sector of labor is hit, then where do those workers go?” Professor Warman said. Women, and to a lesser degree people of color, are likely to be disproportionately affected, he added.
The grocery business has long been a source of steady, often unionized jobs for people without a college degree. But technology is changing the sector. Self-checkout lanes have reduced the number of cashiers; many stores have simple robots to patrol aisles for spills and check inventory; and warehouses have become increasingly automated. Kroger in April opened a 375,000-square-foot warehouse with more than 1,000 robots that bag groceries for delivery customers. The company is even experimenting with delivering groceries by drone.
Other companies in the industry are doing the same. Jennifer Brogan, a spokeswoman for Stop & Shop, a grocery chain based in New England, said that technology allowed the company to better serve customers — and that it was a competitive necessity.
“Competitors and other players in the retail space are developing technologies and partnerships to reduce their costs and offer improved service and value for customers,” she said. “Stop & Shop needs to do the same.”
Anxieties over a lag in hiring lifted on Friday as the government reported that employers added 850,000 workers in June, the largest monthly gain since last summer.
Wages jumped for the third month in a row, a sign that employers are trying to attract applicants with higher pay and that workers are gaining bargaining power.
Rising Covid-19 vaccination rates and a growing appetite for travel, dining out, celebrations and entertainment gave a particular boost to leisure and hospitality businesses. The biggest chunk of June’s gains — 343,000 — could be found there.
accelerated rate of early retirements means that some of those workers will never come back.
“Today there are more job openings than before the pandemic and fewer people in the labor force,” said Becky Frankiewicz, president of the staffing company ManpowerGroup North America. “The single defining challenge for employers is enticing American workers back to the work force.”
The report follows several promising economic developments this week. Consumer confidence, which surged in June, is at its highest point since the pandemic’s onset last year. Stocks closed out the first half of the year at record highs. And the Congressional Budget Office said Thursday that the economy was on track to recover all the jobs lost in the pandemic by the middle of next year.
But economists cautioned against trying to divine the complex currents crisscrossing the labor market from a single month’s data, particularly given how much the pandemic has disrupted employment patterns.
may reflect smaller-than-expected layoffs rather than big gains. Over a longer period, employment in both public and private education remains significantly below its prepandemic level.
remarks from the White House.
The June figures are unlikely to allay the concerns of small-business owners and managers who complain about the difficulty finding workers. Nearly half report that they cannot fill openings, according to a recent survey by the National Federation of Independent Business.
The competition for workers has pushed up wages. Average hourly earnings climbed 3.6 percent in the year through June and 0.3 percent over the month. Low-wage workers seem to be the biggest beneficiaries of the bump in pay.
Ms. Frankiewicz of ManpowerGroup said the rise of “superemployers” like Amazon and Walmart was making it even more difficult for small and medium-size businesses to attract workers. In the summer of 2019, the top 25 employers had 10 percent of the open jobs, she said, while “today 10 employers do.”
moved to end distribution of federal pandemic-related jobless benefits even though they are funded until September, arguing that the assistance — including a $300 weekly supplement — was discouraging people from returning to work.
The latest jobs report did not reflect the cutoff’s impact because the government surveys were completed before any states ended benefits.
Staffing firms said they had not seen a pickup in job searches or hiring in states that have since withdrawn from the federal jobless programs.
Indeed surveyed 5,000 people in and out of the labor force and found that child care responsibilities, health concerns, vaccination rates and a financial cushion — from savings or public assistance — had all affected the number looking for work. Many employers are desperate to hire, but only 10 percent of workers surveyed said they were urgently seeking a job.
And even among that group, 20 percent said they didn’t want to take a position immediately.
Aside from ever-present concerns about pay and benefits, workers are particularly interested in jobs that allow them to work remotely at least some of the time. In a survey of more than 1,200 people by the staffing company Randstad, roughly half said they preferred a flexible work arrangement that didn’t require them to be on site full time.
Some employers are getting creative with work arrangements in response, said Karen Fichuk, chief executive of Randstad North America. One employer changed the standard shift to match the bus schedule so employees could get to work more easily. Others adjusted hours to make it easier for parents with child care demands.
Health and safety concerns are also on the minds of workers whose jobs require face-to-face interactions, the survey found.
Black and Hispanic workers, who were disproportionately affected by the coronavirus and by job losses, are having trouble regaining their foothold. “The Black unemployment rate is still exceptionally high,” at 9.2 percent compared with 5.2 percent for white workers, said Michelle Holder, an economist at John Jay College in New York.
One factor in the elevated Black jobless rate is that the ranks of Black workers employed or seeking jobs grew sharply last month. But participation in the labor force remains lower than it was before the pandemic among all major racial and ethnic groups.
Professor Holder said some people were reluctant to rejoin the labor force because of the quality and the pay of the work available.
“We don’t have a shortage of people to work,” she said. “What we don’t have are decent jobs.”
Jeanna Smialek and Ben Casselman contributed reporting.
“It’s gone from feeling super lonely and now it’s feeling pretty normal,” Mr. Gray added.
Wall Street and the banking sector are pillars of the city’s economy, and they have been among the most aggressive industries in prodding employees to go back to the office. James Gorman, the chief executive of Morgan Stanley, told investors and analysts this month that “if you want to get paid in New York, you need to be in New York.”
Many firms, including Blackstone and Morgan Stanley, have huge real estate holdings or loans to the industry, so there is more than civic pride in their push to get workers to return. Technology companies like Facebook and Google are increasingly important employers as well as major commercial tenants, and they have been increasing their office space. But they have been more flexible about letting employees continue to work remotely.
Google, which has 11,000 employees in New York and plans to add 3,000 in the next few years, intends to return to its offices in West Chelsea in September, but workers will only be required to come in three days a week. The company has also said up to 20 percent of its staff can apply to work remotely full time.
The decision by even a small slice of employees at Google and other companies to stay home part or all of the week could have a significant economic impact.
Even if just 10 percent of Manhattan office workers begin working remotely most of the time, that translates into more than 100,000 people a day not picking up a coffee and bagel on their way to work or a drink afterward, said James Parrott, an economist with the Center for New York City Affairs at the New School.
“I expect a lot of people will return, but not all of them,” he said. “We might lose some neighborhood businesses as a result.”
The absence of white-collar workers hurts people like Danuta Klosinski, 60, who had been cleaning office buildings in Manhattan for 20 years. She is one of more than about 3,000 office cleaners who remain out of work, according to Denis Johnston, a vice president of their union, Local 32BJ of the Service Employees International Union.
Despite the loud busking music, arcade lights and swarms of people, it was hard to be distracted from the corner street stall serving steaming cupfuls of tteokbokki — a medley of rice cake and fish cake covered in a concoction of hot sweet sauce. I gulped when I felt my friend tugging on the sleeve of my jacket, anticipating that he wanted to try it. After all, I promised to treat him out if he visited me in Korea over winter break.
The cups of tteokbokki, garnished with sesame leaves and tempura, was a high-end variant of the street food, nothing like the kind from my childhood. Its price of 3,500 Korean won was also nothing like I recalled, either, simply charged more for being sold on a busy street. If I denied the purchase, I could console my friend and brother by purchasing more substantial meals elsewhere. Or we could spend on overpriced food now to indulge in the immediate gratification of a convenient but ephemeral snack.
At every seemingly inconsequential expenditure, I weigh the pros and cons of possible purchases as if I held my entire fate in my hands. To be generously hospitable, but recklessly drain the travel allowance we needed to stretch across two weeks? Or to be budgetarily shrewd, but possibly risk being classified as stingy? That is the question, and a calculus I so dearly detest.
Unable to secure subsequent employment and saddled by alimony complications, there was no room in my dad’s household to be embarrassed by austerity or scraping for crumbs. Ever since I was taught to dilute shampoo with water, I’ve revised my formula to reduce irritation to the eye. Every visit to a fast-food chain included asking for a sheet of discount coupons — the parameters of all future menu choice — and a past receipt containing the code of a completed survey to redeem for a free cheeseburger. Exploiting combinations of multiple promotions to maximize savings at such establishments felt as thrilling as cracking war cryptography, critical for minimizing cash casualties.
However, while disciplined restriction of expenses may be virtuous in private, at outings, even those amongst friends, spending less — when it comes to status — paradoxically costs more. In Asian family-style eating customs, a dish ordered is typically available to everyone, and the total bill, regardless of what you did or did not consume, is divided evenly. Too ashamed to ask for myself to be excluded from paying for dishes I did not order or partake in, I’ve opted out of invitations to meals altogether. I am wary even of meals where the inviting host has offered to treat everyone, fearful that if I only attended “free meals” I would be pinned as a parasite.
Although I can now conduct t-tests to extract correlations between multiple variables, calculate marginal propensities to import and assess whether a developing country elsewhere in the world is at risk of becoming stuck in the middle-income trap, my day-to-day decisions still revolve around elementary arithmetic. I feel haunted, cursed by the compulsion to diligently subtract pennies from purchases hoping it will eventually pile up into a mere dollar, as if the slightest misjudgment in a single buy would tip my family’s balance sheet into irrecoverable poverty.
Will I ever stop stressing over overspending?
I’m not sure I ever will.
But I do know this. As I handed over 7,000 won in exchange for two cups of tteokbokki to share amongst the three of us — my friend, my brother and myself — I am reminded that even if we are not swimming in splendor, we can still uphold our dignity through the generosity of sharing. Restricting one’s conscience only around ruminating which roads will lead to riches risks blindness toward rarer wealth: friends and family who do not measure one’s worth based on their net worth. Maybe one day, such rigorous monitoring of financial activity won’t be necessary, but even if not, this is still enough.
Federal Reserve officials left policy unchanged on Wednesday but moved up expectations for when they would first raise interest rates from rock bottom, a sign that a healing labor market and rising inflation were giving policymakers confidence that they would achieve their full employment and stable price goals in coming years.
Fed policymakers expect to make two interest rate increases by the end of 2023, the central bank’s updated summary of economic projections showed Wednesday. Previously, the median official had anticipated that rates would stay near zero — where they have been since March 2020 — at least into 2024. The Fed now sees rates rising to 0.6 percent by the end of 2023, up from 0.1 percent.
The significant upgrade comes as the economy is healing, and as Fed officials penciled in stronger growth in 2021, faster inflation and slightly quicker labor market progress next year.
“Progress on vaccinations has reduced the spread of Covid-19 in the United States,” the Fed said in a statement released at the conclusion of its June 15-16 policy meeting, one that contained several optimistic revisions. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
late April, and since it last released economic projections in March. Inflation data have come in faster than officials had expected, and consumer and market expectations for future inflation have climbed. Employers have been hiring more slowly than they were this spring, as job openings abound but it takes workers time to flow into them.
The Fed continued to call that inflation increase largely “transitory” in its new statement. It has consistently pledged to take a patient approach to monetary policy as the economic backdrop rapidly shifts.
Mr. Powell acknowledged that “inflation has come in above expectations” but suggested it was largely because of robust consumer demand coupled with shortages and bottlenecks as the economy reopens.
“Our expectation is that these high inflation readings that we’re seeing now will start to abate,” he said, adding that if prices moved up in a way that was inconsistent with the Fed’s goal, central bankers would be prepared to react by reducing monetary policy support.
The central bank made no changes on Wednesday to its main policy interest rate, which has been set at near zero since March 2020, helping keep borrowing cheap for households and businesses. The Fed will also continue to buy $120 billion in government-backed bonds each month, which keeps longer-term borrowing costs low and can bolster stock and other asset prices. Those policies work together to keep money flowing easily through the economy, fueling stronger demand that can help to speed up growth and job market healing.
Officials have pledged to continue to support the economy until the pandemic shock is well behind the United States. Specifically, they have said that they want to achieve “substantial” progress toward their two economic goals — maximum employment and stable inflation — before slowing their bond purchases. The bar for raising interest rates is even higher. Officials have said they want to see the job market back at full strength and inflation on track to average 2 percent over time before they will lift interest rates away from rock bottom.
a “number” of officials at the Fed’s April meeting suggested that they would like to start talking about how and when to begin the so-called taper soon, minutes from that gathering showed.
The Fed is buying $80 billion in Treasury bonds each month, and $40 billion in mortgage-backed securities. Those purchases have helped to push the central bank’s balance sheet holdings up to about $8 trillion — roughly twice as big as they were as recently as summer 2019.
Officials including Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, and Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, have signaled that they think it would be appropriate to get those discussions going. Other important policymakers have sounded patient, with John Williams, the New York Fed president, saying that “we’re not near the substantial further progress marker,” in a June 3 Yahoo Finance interview.
Mr. Powell said on Wednesday that officials had begun “talking about talking about” slowing those bond purchases but that the central bank was not preparing to start tapering anytime soon.
“I expect that we’ll be able to say more about timing as we start to see more data,” Mr. Powell said.
Some Republican politicians have questioned whether emergency monetary policy settings remain necessary as the economy reopens and growth rebounds, the Fed has signaled over that the United States is in for a long period of central bank support.
preferred inflation gauge came in at 3.6 percent in April compared to the previous year and is likely to jump even higher in May. The more up-to-date Consumer Price Index was up 5 percent in the year through last month, partly as the figures were compared to very low readings last year.
Officials expect the current price pop to prove temporary, the product of one-off data quirks and the fact that demand is recovering faster than supply chains coming out of the pandemic. Markets seem to broadly share that view: While they have penciled in slightly higher inflation, that recent increase in expectations appears to be stabilizing at a level that is probably more or less consistent with the Fed’s goals.
Still, Wall Street strategists and politicians in Washington alike are watching for any sign that Fed officials have become more concerned about lasting price pressures as some stickier prices in the real economy — such as shelter costs — stabilize and increase.
If inflation does take off in a lasting way and the Fed has to lift interest rates to slow the economy and tame price pressures, that could be bad news. Rapid rate adjustments have a track record of causing recessions, which throw vulnerable workers out of jobs.
But the Fed tries to balance risks when setting policy, and so far, it has seen the risk of pulling back support early as the one to avoid. Millions of jobs are still missing since the start of the pandemic, and monetary policy could help to keep the economy recovering briskly so that displaced employees have a better chance of finding new work.
Alan Rappeport and Matt Phillips contributed reporting.