Fed to Keep Rates Lower for Longer, BlackRock's Watson Says

The transcript discusses the Federal Reserve's current stance, emphasizing that there is no significant shift in policy. Chairman Powell and the FOMC are focused on maintaining a dual mandate of full employment and inflation control. The Fed is prepared to let inflation run slightly higher if necessary. Market reactions indicate a shift in interest rate expectations, driven by inflation expectations and real yield increases. The market is closely monitoring economic data, particularly payrolls and employment rates, to gauge recovery. There is a noted disparity between manufacturing and services sectors, and the market is pricing in potential policy changes based on data trends.

In what ways is the US economy showing signs of improvement according to the text?

What challenges does the economy still face despite the improvements mentioned?