Fed's Powell says US economy is entering bounce-back still clouded by 'significant uncertainty'

• Federal Reserve Chairman Jerome Powell said Tuesday that the US is nearing the end of its shutdown phase and beginning to bounce back.
• The central bank chair told the Senate Banking Committee in Tuesday testimony that surprisingly optimistic retail sales and jobs data suggest a bottom was reached in May.
• Still, employment and economic activity "remain far below their pre-pandemic levels" and "significant uncertainty" looms over the nation's trajectory, Powell warned.
• Powell also emphasized that a true economic rebound hinges on equality, noting the downturn could further widen gaps in economic well-being that the long expansion had made some progress closing."
• Visit the Business Insider homepage for more stories.

The US economy is nearing the end of its initial shutdown phase and entering its recovery from the coronavirus pandemic, Federal Reserve Chairman Jerome Powell said.

The central bank chair testified to the Senate Banking Committee in a Tuesday teleconference, reiterating the Fed's pledge to use all of its tools to bring about a robust economic recovery. Powell laid out three phases of the virus downturn and said he believes the nation is entering the second stage.

"First was the shutdown and we've seen what that would produce ... we may be reaching a bottom on that now," Powell said. "We would expect to see large numbers of people ... coming back to work during this second period, call it the bounce back or the beginning of the recovery."

Read more: Main Street traders have been crushing Wall Street in recent months. Goldman Sachs breaks down what retail investors should buy to keep winning — and lists the 12 stocks leading the charge.

The chairman cited surprisingly positive data releases for his statements. May's jobs report largely beat economist expectations, with the unemployment rate falling to 13.3% instead of spiking to nearly 20% as experts projected.

Retail sales data released Tuesday morning notched a record 17.7% jump in May, more than twice the amount expected by economists. Equities tore higher following the release as investors grew more hopeful for a V-shaped economic recovery.

Despite his slightly hopeful outlook, Powell noted in his opening statement that the US remains mired in uncertainty. Rising coronavirus case counts throughout the country threaten to derail reopenings, and little is known about when an effective COVID-19 treatment could be marketed. Even if the virus is contained and the economy fully reopens, some industries will "struggle" to return to pre-pandemic levels of activity due to consumer fears and lasting damage, Powell said.

"The levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery," he said. "Until the public is confident that the disease is contained, a full recovery is unlikely."

Read more: Bernstein says buy these 7 stocks that are unfairly beaten-down and built for explosive gains in the future

The chairman also warned that a prolonged downturn would disproportionately harm low-income workers, women, and minorities. The slump "could further widen gaps in economic well-being that the long expansion had made some progress closing," Powell said. In more pointed remarks, the chair condemned racism and referenced the current protests against racial inequality and police brutality.

"I speak for my colleagues throughout the Federal Reserve System when I say, there is no place at the Federal Reserve for racism and there should be no place for it in our society. Everyone deserves the opportunity to participate fully in our society and in our economy," Powell said.

Now read more markets coverage from Markets Insider and Business Insider:

Investors sink a record $4.6 trillion into money-market funds to ride out pandemic uncertainty

The dollar will collapse under a ballooning US deficit and deglobalization, former Morgan Stanley Asia chairman says

Famed short-seller Andrew Left breaks down why he's betting against these 4 companies — including Hertz and Tesla competitor Nikola