2020 Lessons, 2021 Priorities this post authored by Mary C. Daly
What lessons should we take from a difficult year - and what should our priorities be for 2021? Overcoming the harsh and uneven economic impacts of COVID-19 and returning to full employment and sustainable 2% inflation will be the Federal Reserve’s chief concerns. But success will require us to have confidence in the power of our tools.
The following is adapted from a presentation by the president and CEO of the Federal Reserve Bank of San Francisco to the Arizona State University Economic Forecast Luncheon on December 1.
Hello everyone. It’s safe to say that 2020 has been a year to remember. Twelve months ago, we were in the midst of the longest economic expansion in U.S. history. Unemployment sat near historic lows, wages and incomes were rising, and inflation was moving gradually back toward our 2% target.
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With the economic recovery faltering and federal aid stalled in Washington, state governments are stepping in to try to help small businesses survive the pandemic winter.
The Colorado legislature held a special session last week to pass an economic aid package. Ohio is offering a new round of grants to restaurants, bars and other businesses affected by the pandemic. And in California, a new fund will use state money to backstop what could ultimately be hundreds of millions of dollars in private loans. Other states, led by both Republicans and Democrats, have announced or are considering similar measures.
But there is a limit to what states can do. The pandemic has ravaged budgets, driving up costs and eroding tax revenues. And unlike the federal government, most states cannot run budget deficits.