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Waters at Hearing on the State of the Economy: The Fed Must Play a Central Role in This Economic Transformation

Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave the following statement at a full Committee virtual hearing entitled, “Monetary Policy and the State of the Economy.”

First, I would like to welcome back, Chair Powell. We’re delighted to have you with us here today.

Much has happened since the last time you testified on the Fed’s Monetary Policy Report in February. Since then, Democrats passed, and President Biden signed into law, the American Rescue Plan. Because of the American Rescue Plan, more than 58 percent of adults in the United States have been fully vaccinated, and businesses are reopening. More than three million jobs were added to our economy in the Biden Administration’s first five months – the most in any President’s first five months – compared to just over two million jobs created during the first 12 months of Trump’s reckless tenure. And the latest jobs report shows that 850,000 jobs were added to the economy in June alone, a tremendous increase that beat market expectations. 

Simply put, without the American Rescue Plan and the extraordinary leadership from the Biden Administration and Democrats in Congress, our economy would not be on the track to recover. 

But, we still have more work to do to put this crisis firmly behind us and build a more resilient economy for the future. For example, while the unemployment rate continues to fall, joblessness remains higher for Black and Latinx workers than it does for white workers. To be clear, we will not have a full recovery without closing this gap.

While inflation has risen in recent months, Chair Powell, you and other experts have attributed this to short-term factors. Consumer demand is way up, with people once again dining out, buying cars, and purchasing homes. But supply chains haven’t yet kept up with this pace, which, as a result, has led to higher prices.  I think the Fed is right when they say that this dynamic will subside, but I expect the Fed to continue to monitor high prices as it fulfills its dual mandate to promote price stability and full employment. At the same time, Congress should be considering whether it’s better to address semiconductor shortages and soaring home prices through smart investments, or face higher interest rates from the Fed. 

The COVID-19 pandemic disrupted life for all of us and shifted the way we think about the economy. We see this in the huge number of women and people of color who left the workplace. We see this in a generation of young people weighed down by student loan debt. And we see this in the surprising percentage of workers who have quit their jobs even as the unemployment rate remains elevated. We are in a moment of transformation that requires a fresh approach and investments that will close the racial wealth and income gaps, address climate change and our child care crisis, and, finally, end homelessness.

The Fed must also play a central role in this economic transformation.  The Fed must ensure that our economy recovers equitably, reverse deregulatory actions that rolled back rules for Wall Street, and shore up protections so that our financial system is less vulnerable to shocks.

Whether by partnering with the Treasury to implement a framework focused on climate change and financial stability; exploring a Central Bank Digital Currency and implementing faster payments; or strengthening its outdated approach to bank mergers, the Fed must fulfill its role in ensuring a strong and inclusive recovery.

Chair Powell, I look forward to your testimony this afternoon.

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