Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, made the following opening statement at today’s hearing, “Monetary Policy and the State of the Economy.”
Chair Powell, the law that required the Federal Reserve Chair to testify before Congress twice each year was established in 1978. However, no Fed Chair has ever testified before this Committee with the economy in the condition that it is in today.
More than 116,000 Americans are dead from the coronavirus, and just last week, 21 states recorded an increase in their average daily new cases compared to the prior week.
The April jobs report was the worst in American history, showing 20.5 million jobs lost and wiping out nearly a decade worth of job gains in a single month.
Today, the topline unemployment rate remains higher than it has been at any time since the Great Depression, and three full percentage points above its highest level during the Great Recession. As you recently noted Chair Powell, the expected decline in GDP is likely to be the most severe on record.
Communities of color—who are suffering disproportionately from the virus—are also in major economic distress. Even before the crisis, a 2019 McKinsey study found that the overall racial wealth gap between Black and White families widened from about $100,000 in 1992 to $154,000 in 2016.
Unfortunately, over 2 million Black Americans lost their jobs as a result of COVID-19, and nearly 18% of Black workers have lost their jobs since February. Your warning that, “If not contained and reversed, the downturn could further widen gaps in economic well-being,” is a reminder that the Fed and Congress must use all tools available to address these unjust disparities.
States and cities are making painful cuts at a moment when they desperately need more resources. As states scramble to pay skyrocketing unemployment claims and meet public health expenses, 1.6 million public sector employees have lost their jobs. State governments face an estimated $790 billion revenue shortfall next year, and without action, 5.3 million more public sector employees could lose their jobs. We are also facing an impending eviction crisis with 30 percent of renters being unable to pay their rent for June.
Against this backdrop, Donald Trump has urged a premature return to business as usual, and hailed a jobs report that showed Black unemployment rising as a “great day.”
Last month, the House passed the Heroes Act to extend assistance to states, cities, the unemployed, as well as renters and homeowners, but the Senate Republican leader has said Congress should “wait and see” before considering more relief.
While the Trump Administration has declared victory and spread dangerous misinformation, you have been a voice of reason, cautioning that unemployment is still, “historically high,” recognizing its disproportionate impact on communities of color, and acknowledging that economic recovery will depend on public health outcomes.
You have also stressed that “additional fiscal support” is needed to avoid long-term damage.
The economy recovered unevenly from the last crisis, leaving the Fed with limited ammunition. Nevertheless, the Fed has stepped in to rescue an economy in free fall. We have seen the stock market respond— but communities of color and small businesses are reeling, and you are at the end of what you can reasonably do in terms of monetary policy to help the economy. Now is the time for strong fiscal policy from Congress in the form of the Heroes Act. Without it, I am extremely concerned about the future of our nation’s economy.