Federal Reserve Chair Jerome Powell’s belief that the U.S. economy has “learned to handle” the coronavirus and won’t be swamped in a fresh wave of infections or by rising inflation may get tested in coming weeks as schools reopen, supply chains remain clogged, and federal unemployment benefits wane.
Data released on Thursday showed the risk ahead as the country navigates the transition from an economy dependent for the last year on federal government benefits to one where those emergency programs expire and private incomes take over.
The economy returned to its pre-pandemic level of output in the second quarter, according to gross domestic product data released by the Commerce Department on Thursday, a rebound that came earlier than many expected. But the report also showed personal income dropping alongside a decline in federal transfer payments and the economy growing at an annual rate of 6.5%, slightly below the 7% expected by the U.S. central bank.
