Fed Chair Powell was the economic hero of the pandemic recovery. Now America has turned on him as inflation torches wallets.

• Fed Chair Powell's relief actions in 2020 won widespread praise. Now he's catching flak for inflation.
• Recent rate hikes have been criticized for slowing hiring and risking an economic downturn.

Federal Reserve Chair Jerome Powell was one of the most celebrated policymakers of 2020.

Under his leadership, the central bank unleashed a quick and creative response to an unprecedented economic crisis. The Fed cut interest rates to near zero, buoyed financial markets with huge asset purchases, and started rolling out no less than nine emergency lending programs all in the span of a few weeks, and before much of the country had locked down.

Democrats and Republicans alike threw their support behind Powell. Claudia Sahm, a former Fed economist, characterized him as "Washington's best-liked man" in a March 2021 profile in The New York Times. New York Magazine deemed Powell "the world's best bureaucrat."

Times have since changed. The labor market has quickly rebounded, but inflation now poses the greatest risk to the economic recovery. That problem is the Fed's to solve, and Powell is catching just as much flak today as he was winning acclaim one year ago.

It doesn't help that the Fed's popularity had such a long way to fall. The central bank "was able to shine as an independent-within-government agency" during the kind of crisis that required rapid action, Kaleb Nygaard — a senior research associate at the Yale Program on Financial Stability and a former Chicago Fed analyst — told Insider.

While Congress was still finalizing its first round of stimulus checks and boosted unemployment benefits, the Fed had already rolled out all the tools in its toolbox and then some.

"The government actually did pretty well during that first bit in responding to the economic crisis, but the Fed was able to go super fast, which is exactly what you want them to do," Nygaard added.

That independence is now acting against the Fed's broad appeal. The Biden administration has punted most of the inflation problem to the central bank, with Brian Deese, director of the National Economic Council, telling Bloomberg TV on June 10 that "the Fed has the tools that it needs, and we are giving them the space that it needs to operate."

Chief among those tools are higher interest rates, and the Fed has been using them at a historic pace. Officials raised the Fed's benchmark interest rate by 0.75 percentage points on June 15, marking the largest one-off hike since 1994. By lifting rates, the central bank aims to slow Americans' spending and close the gap between supply and demand.

The increases represent the central bank's best bet for cooling inflation, but the same lawmakers that cheered the Fed's emergency measures in 2020 are pushing back.

"The risk is that the measures you're taking will slow down other parts of the economy without getting us the benefit of lower prices," Sen. Chris Van Hollen of Maryland told Powell.

Higher rates also slow economic growth, meaning companies will likely hire at a slower pace and issue smaller raises in the near future. Several Senate Democrats hammered Powell in a Tuesday hearing, arguing the Fed was slowing the labor market's recovery in hopes of cooling inflation. Republicans, meanwhile, pilloried the Fed chair for not raising rates sooner and allowing inflation to reach 41-year highs.

Everyday Americans aren't happy with the tradeoff, either. Consumer sentiment sits at its lowest recorded level since the late 1970s as households cite inflation for their growing pessimism. Google searches for "recession" surged to record highs amid fears that the Fed's aggressive hiking plans could slow economic growth to a halt.

Labor activists staked out the Federal Reserve building in Washington, DC earlier in June urging policymakers to keep pursuing maximum employment. Rate hikes might slow inflation, they argued, but it will slam the brakes on job creation while the unemployment rate for minorities sits well above that for white Americans.

"We stand opposed to the Federal Reserve taking any action that throws Black workers under the bus for inflation that we did not cause," Jennifer Wells, deputy director of Black Led Organizing at Community Change, said at the June 14 protest. "We have such a long way to go, and they are in that room making decisions to slow what little we have down."

Powell has defended the Fed's decision-making throughout, arguing on Tuesday that officials would've likely started raising rates earlier if they had known that factors like war and rolling lockdowns in China would complicate the problem. He also pointed to the labor market's strength as a sign that the economy is resilient and can withstand higher rates.

Until inflation slows, however, the Fed is playing catch-up. The central bank took a gamble early in the pandemic, Nygaard said, allowing inflation to run hotter than usual in pursuit of a faster labor-market recovery. The plan reflected lessons learned from the Great Recession and the sluggish rebound that followed. Policymakers saw the risk of overreacting as less than the risk of under-reacting, but that bet simply didn't work out in the Fed's — and the country's — favor, Nygaard added.

"They gave it more odds that this would bring employment back without causing inflation ... it just so happened that inflation got out of hand," he said. "They were on the wrong side of the bet, even through it was the right bet to make."