"On balance it looks like the data are pointing to the slowing in pace in the recovery," Powell said on Wednesday. "I want to stress it's too early to say both how large that is and how sustained it will be. We just don't know yet because we have to wait to see the actual data on spending and employment come in. But this is what we're seeing."
Powell cited preliminary "high frequency data" on people’s movement and spending that indicated a slowdown in the recovery seen since US businesses began reopening in May from a six-week lockdown forced by the pandemic.
"It might be short lived. It might not be. Some measures of consumer spending based on debit and credit card data have gone down. Recent indicators show slowing in job growth particularly in smaller businesses. Hotel occupancy rates have flattened out. People aren't going to restaurants, pharmacies and beauty salons as much. Consumer surveys that dropped when the pandemic arrived and moved back up sharply. They look like they're softening again. There are areas of strength," he said.
He also said some jobs lost to the COVID-19 will never return, adding that many laid off from eateries and places of public entertainment such as restaurants and bars and travel-related businesses like hotels just did not have enough jobs to go back to.
"The labor market really has a long way to go. Even with two very strong months of job creation, we still have 14 million people unemployed. That leads to a situation where there are so many people looking for jobs and we have the economy only partially reopened. We went from the lowest levels of unemployment in 50 years to the highest we had in 90 years and we did it in the space of two months," he added.
He also said he would be remiss if he did not stress the importance of having to work as hard to fight the virus as to fix the economy.
"The path of the economy is going to depend to a very high extent on the course of the virus, on the measures that we take to keep it in check. That is just a very fundamental fact about our economy right now. The two things that are not in conflict, social distancing measures and fast reopening of the economy actually go together. They're not in competition with each other," the Fed chief said.
The US economy shrank 5 percent in the first three months of 2020 for its sharpest decline since the financial crisis of 2008/09, as most of the 50 US states went into lockdown to stem the outbreak of the COVID-19.
Economists warn of a double-digit recession for the quarter ended June although they say they also notice "green shoots" of recovery from the reopening of businesses over the past three months that led to net gain of 7.3 million jobs in the May-June period, after an employment drop of over 21 million between March and April.