Powell Talks of Concerns Over Economic Scarring

Q: Re long-term labor market scarring, what are you most worried about?

- A: Worried about scarring from people being out of the labor market for an extended period of time. The evidence is clear it becomes much more difficult if you're out for a long time to get back in and get back to the life that you had. Same thing with these small businesses, many of which are the work of generations.

• I would say that so far we haven't experienced that level of scarring either in the labor market or among smaller businesses. We're not living that downside case we were very concerned about a year ago.
• Notwithstanding that we're a long way before full employment, there are 8.4 million jobs lower than in Feb 2020, we have a long way to go. It's going to be a different economy. It seems likely that many people who had those service sector jobs will struggle to find the same job and will need to have time to find work to the working life they had. These are people who were working in Feb 2020. They clearly want to work, and they will need help.