US economy to recover only when people feel ‘safe’ from virus: Powell
The US economy will only get over the coronavirus downturn when persons feel safe to resume their normal activities, Federal Reserve Chair Jerome Powell said in remarks released Monday ahead of congressional testimony.
The central bank chief is defined for three days of testimony before House and Senate committees starting Tuesday on the response to the coronavirus downturn, which has caused tens of an incredible number of job losses and a record plunge in annualized GDP in the next quarter because of business shutdowns to stop the virus’s spread.
Though some sectors of the economy, such as for example retail sales and housing, have observed sharp rebounds, viral infections remain rife and Congress is deadlocked on additional spending to greatly help the recovery.
“A full recovery will probably come only when persons are confident that it is safe to reengage in a wide range of activities,” Powell will tell House Financial Services committee members on Tuesday in an appearance with Treasury Secretary Steven Mnuchin, in line with the prepared remarks.
“The road forward will rely upon keeping the virus in order, and on policy actions taken at all levels of government.”
The central bank rolled out trillions of dollars in liquidity and slashed its key interest rate to near-zero as the pandemic hit, while saying it could do more if needed.
However the Fed can only just lend, not spend.
And Powell has repeatedly needed more support for the economy, but despite weeks of talks, there have been few signs of progress in negotiations between Democrats and Republicans in Washington.
Lawmakers approved the $2.2 trillion CARES Act in March as the pandemic struck, including extra payments to the unemployed and an application of loans and grants for smaller businesses, but those programs have expired in recent weeks.
On Monday, White House economical advisor Larry Kudlow said the country was seeing a “self-sustaining, strong” recovery that may not require more stimulus.
“I really do not think the recovery is contingent on that assistance package,” Kudlow said.
