While technological advances are generally positive for societies over the long term, Powell said, on a short-term basis they create disruption, and as the market adjusts to the new normal the pain isn’t shared evenly.
For example, it’s likely that lower-paid workers, as well as those in jobs requiring face-to-face interactions, such as retail or restaurant workers, will shoulder most of the burden of this shift. These groups, heavily skewed towards women and minorities, have already been among those most affected by pandemic layoffs, Powell said.
Generally speaking, inequality holds the economy back, the central banker said.
“Even after the unemployment rate goes down and there’s a vaccine, there’s going to be a probably substantial group of workers who are going to need support as they’re finding their way in the post-pandemic economy, because it’s going to be different in some fundamental ways,” Powell said.
More work needs to be done
Powell has long said that the economy might need more stimulus from both the government and the central bank to get through the crisis. He again echoed this sentiment on Thursday.
“My sense is that we will need to do more and that Congress will need to do more,” he said.
While the prospect of a vaccine is goods news, many questions remain, including the resurgence of the virus around the world.
“The main risk we see today […] is the further spread of disease here in the United States,” he said. Several states have restarted their pandemic restrictions to curb the spread.
US stocks weakened following Powell’s sobering comments. The market had lately been rallying on vaccine hopes.