40 percent of households earning less than $40K lost jobs in March: Fed chairman

Federal Reserve Chairman Jerome Powell said Wednesday that 40 percent of U.S. households earning less than $40,000 a year lost their jobs in March, underscoring the devastating financial effect of the pandemic on low-income workers.

“This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future,” he said in prepared remarks at a virtual event hosted by the Peterson Institute of International Economics in Washington.

Powell was citing figures from a Fed survey that is set for release Thursday.

The new figures back up anecdotal evidence suggesting lower-income workers have been hardest hit by the economic effects of the coronavirus pandemic, which has resulted in tens of millions of Americans filing for unemployment benefits since mid-March. The unemployment rate spiked to 14.7 percent in April, the highest level since the Great Depression.

“While we are all affected, the burden has fallen most heavily on those least able to bear it,” Powell said.

In the same speech, Powell said the U.S. could suffer serious long-term economic damage from the pandemic. He called on lawmakers to consider another ambitious fiscal rescue package to avoid a cycle of business failures, job losses and bankruptcies that could hinder the economy well after the pandemic subsides.

“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Powell said. “We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased.”

Powell’s call for more stimulus aid comes as congressional Republicans have rejected the $3 trillion emergency relief package unveiled by House Democrats on Tuesday.