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Fed Reserve

Buttigieg Optimistic About Future of Travel Despite COVID-19

New U.S. transportation chief Pete Buttigieg said Wednesday he was “deeply optimistic” about the future of travel despite COVID-19. This is despite its devastating effects on airlines, airports, transit systems and road use.

The coronavirus has sent tens of millions of workers home for months. It has slashed tourism and business travel demand. 

The pandemic has placed significant burdens on transportation services to deliver packages, vaccines and other critical goods. That said, Congress is being asked again for a new round of emergency funding.

The U.S. Transportation Secretary Pete Buttigieg said they would break new ground in ensuring that their economy recovers and rebuilds. That is in rising to the climate challenge, and making sure transportation is an engine for equity in their country. This was from an email from Buttigieg, who was sworn in on Wednesday.

Last year, there were 500 million fewer U.S. airline passengers, down 61%, screened at airports. In the first 11 months last year, U.S. drivers drove 410 billion fewer miles, down 13.7%. 

After 9.9 billion transit trips in 2019, trips fell 80% after the pandemic began. These trips have remained down 65%.

Additional Government Assistance

States, trade groups, and unions want at least $130 billion in additional government assistance. This is to rescue the struggling sector hit hard by the collapse in demand.

From that figure, $18 billion is sought by state transportation departments. Moreover, $40 billion for bus and vessel industries, and $39.3 billion for transit.

Aviation unions are seeking $15 billion to keep thousands of airline employees in jobs after March 30. Additionally, airports want $17 billion, while passenger railroad Amtrak seeks $1.5 billion.

Since March, Congress has approved $39 billion to aid transit systems and $40 billion in U.S. airline payroll assistance. Furthermore, $12 billion for airports, $10 billion for state transportation departments and $2 billion for bus and vessel industries. U.S. President Joe Biden has called for $20 billion for mass transit.

Fed’s Evans Sees Price Spikes Ahead; Policy Steady

In other economic news, Chicago Federal Reserve Bank President Charles L. Evans on Wednesday forecasted a rapid economic rebound this year. However, monetary policy will need to remain super-easy to boost “too low” inflation, he said. That is even as prices should temporarily spike this spring.

Last March, the central bank cut interest rates to near zero. It pledged to keep them there until the economy reaches full employment, inflation hits and is on track to exceed 2%. 

The Fed also said it would continue to buy $120 billion of bonds each month. That is until it sees substantial further progress toward its employment and inflation goals.

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