Strong economic support from the government and the Federal Reserve has helped the economy bounce back from the epidemic recession, but Fed Chair Jerome Powell warned on Tuesday.
“Very little support leads to poor recovery, creating unnecessary hassles for homes and businesses.” Speech Delivered to the Economic Council. A slower recovery would also exacerbate existing inequalities, Powell said, which would be “tragic.”
The Fed chairman has consistently urged Congress to put more money into re-Congress acquisitions, but the remarks he made on Tuesday are some of his blues so far.
Powell said government support – extended unemployment insurance payments, most U.S. Including direct payments to homes and financial assistance for small businesses – has prevented the so-called recessionary “downward spiral” that will reduce job losses, forcing businesses to cut more jobs. .
But without further support those downward trends could still emerge, the chairman said, adding that “weakness feeds weakness.”
“Conversely, the risks seem high, for now, should be minimal. Even if policy actions ultimately prove to be more than necessary, they will not go to waste,” Powell said in a speech to the National Association for Business Economics. , A group of corporate and academic economists. “If monetary policy and monetary policy continue to work together to provide support to the economy until the economy is clearly out, the recovery will be stronger and faster.”
Powell noted that economic recovery has slowed in recent months compared to its rapid recovery in May and June. Revenue fell in August Gust. And jobs Growth weakened in September, Slowing to just 661,000, less than half of 1.5 million in August and 1.8 million in September
The president of the Federal Reserve Bank of Philadelphia responded to Powell’s remarks in a separate speech Tuesday, calling the current unemployment rate a “. %%” catastrophic high. ”
“Employment, unfortunately, probably won’t return to pre-epidemic levels until 2023. Last week’s disappointing jobs report outlined how far we would have to go,” said Patrick Harker, Fed president of Philadelphia. Said. Harker noted that the forecast is based on Congress passing another stimulus package, which is yet to be finalized.
In recent months, in speeches and congressional testimonies, Powell has repeatedly urged legislators to bring in additional financial aid. However talks between House Speaker Nancy Pelosi and Treasury Secretary Steven Muchin Ongoing, The prospects for the deal remain unclear.
Despite rising 14.7% in April, the U.S. Enabling households to pay bills and maintain their costs, Powell said the ટ્ર 2 trillion financial rescue package approved by Congress in March, as well as previous aid measures, was truly extraordinary.
The Fed chair noted that spending on autos and other long-running goods is actually higher than before the epidemic.
“Still, it looks like a lot of people will go through a period of unemployment, so more support is likely to be needed.”
Powell also discussed the Fed’s new structure for its interest rate policy but gave no new details on how it would work in practice. Last month, the Fed said it is now It wants to keep inflation above 2% “Shortly” before considering short-term interest rates. That a Significant shift From its previous approach, the potential rate is increased once unemployment falls too low or inflation reaches 2%.