By Yasin Ebrahim
Investing.com – Federal Chairman Jerome Powell is expected to talk up the prospect job gains in the coming months, but reiterate that the recent notable increase in inflation will likely prove transitory amid an even economy, according to prepared remarks ahead of his testimony Tuesday for the House Select Subcommittee on Coronavirus Crisis.
“Since we last met, the economy has shown sustained improvement,” Powell will say in prepared remarks.
On the labor market job, Powell is expected to say that “job gains should pick up in coming months as vaccinations rise, easing some of the pandemic-related factors currently weighing them down.”
“The unemployment rate remained elevated in May at 5.8%, and this figure understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates that have prevailed for most of the past year.”
Inflation, meanwhile, which has been the subject of much debate has “increased notably” in recent months, but will likely prove transitory, according to Powell’s testimony. As “these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal,” Powell is expected to say in testimony.
On the overall economy, Powell will acknowledge that indicators of economic activity and employment “have continued to strengthen, and real GDP this year appears to be on track to post its fastest rate of increase in decades,” but bely the strength by highlighting that this “rapid growth reflects the continued bounce back in activity from depressed levels.”
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