Perspectives on the Eventual Economic Recovery
Friday, February 19, 2021
2021 Yale Economic Development Symposium: Rebuilding for an Inclusive Economy
Yale School of Management’s Economic Development Club
Six takeaways from Boston Fed President Eric Rosengren’s Feb. 19, 2021 remarks
- Takeaway: The COVID-19 vaccines are a very promising development, suggesting a robust economic recovery in the second half of the year, but at present the virus continues to limit individuals’ willingness to leave home.
Excerpt: “… A more rapid pace of economic activity will be realized only when there are widespread inoculations. Indeed, a successful vaccination rollout by the middle of the summer suggests that by the second half of this year a robust economic recovery should be underway.”
- Takeaway: The pandemic has had significantly divergent impacts on different industries and workers, as sectors that rely on social interaction – like recreation, entertainment, retail, restaurants, travel, and hotels – have been hit hardest. These sectors employ many workers receiving relatively low wages. Many working in these sectors are Black or Hispanic. So these population segments have suffered disproportionately.
Excerpt: “... The disparate economic outcomes for some individuals and groups during the pandemic have further exacerbated long-standing issues in our economy. […] The uneven nature of this downturn has highlighted the need to rebuild the economy in a more inclusive way.”
- Takeaway: Younger workers and women have also been disproportionately impacted during the downturn. The jobless rate for younger workers is roughly double older workers, under the broader U-6 measure. And the labor force participation rate for women has fallen more sharply, with the differential more pronounced by age.
Excerpt: “For the younger age groups, women’s labor force participation rates have fallen by over a full percentage point more than men’s labor force participation. The younger age categories are those where families might have child care issues during the pandemic which could cause a parent, likely a woman, to leave the labor force.”
- Takeaway: Despite a potentially difficult road ahead, it is notable that monetary policy remains accommodative, with interest rates at the lower effective bound. Meanwhile, legislators in Washington have already taken significant fiscal policy action and are rightly considering further steps.
Excerpt: “Importantly, fiscal policy is the most effective option when monetary policy has reached the lower effective bound for interest rates. […] From my perspective, both the monetary and fiscal policy responses have been quite appropriate, given the severity of the public-health-induced economic crisis.”
- Takeaway: As the recovery continues, it isn’t enough for policymakers to focus on the macroeconomic response to the pandemic. The pandemic has shown the importance of finding ways to make work and life better for low-income workers, so the benefits of the eventual recovery are widely shared.
Excerpt: “The recovery provides us a unique opportunity to ensure that the economic rebuilding process advances a more-inclusive economy. Indeed, the pandemic has highlighted the critical importance of finding ways to improve workforce development, increase workplace flexibility, and revitalize areas where many low-income workers reside.”
- Takeaway: Finding ways during the recovery to raise “job quality” can be a win not only for workers but also for employers seeking to attract and retain talent. We also need to do more to help parents remain in or return to the workforce, including supporting affordable quality early child care and education.
Excerpt: “I believe that as we think about recovery from the pandemic, we should take the time to look for ways that our economy can be reimagined for the better with what we have learned during this trying period. We should learn from the challenges that the pandemic brought to the forefront – but were simmering even before COVID-19. And we should capitalize on the opportunities that stem from realizing new ways of working and extend them more broadly to benefit more workers – especially those in low- and moderate-wage occupations – along with employers, industries, and local economies.”
For more information about Working Places, please visit bostonfed.org/workingplaces.