- Federal Reserve Chairman Jerome Powell urges more government economic relief, arguing that “overdoing” the stimulus carries fewer risks than not appropriating “too little”
- Powell says previous stimulus package helped buoy economy, but that failure to act now could trigger recessionary factors deepen economic disparities
- Democrats and Republicans have been inching closer to a relief deal, but so far have not produced a compromise
In remarks before the National Association for Business Economics on Tuesday, Federal Reserve Chairman Jerome Powell credited government relief with buoying the U.S. economy during the COVID-19 pandemic and urged a new round of fiscal stimulus. Powell also warned that an insufficient relief package would carry more risks of weakening the economic recovery and potentially tipping the nation into a recession.
Powell said a weak recovery would create unnecessary hardships for households and businesses, including insolvencies and bankruptcies that would harm the productive capacity of the economy and inhibit wage growth. He argued that the risks of “overdoing” a new round of stimulus are smaller, and that any extra funds allocated to fiscal relief will not go to waste.
Powell said slow progress on economic recovery could trigger recessionary factors such as a slowdown in consumer spending while also exacerbating economic disparities, noting that low-income workers, women, and minorities have borne the brunt of the losses in the labor market. He said that while the recovery is proceeding more quickly than expected, it is dependent on the nation’s ability to contain the coronavirus; in addition, he does not expect the unemployment rate to reach pre-pandemic levels until the end of 2023.
Powell voiced his support for targeted relief to the businesses hit hardest by the pandemic as well as further assistance to workers whose jobs are unlikely to return. He said that while the CARES Act passed this spring helped boost consumer spending, weakened job growth and falling incomes have pointed to a slower economic recovery in recent months.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been discussing a possible compromise on a new COVID-19 relief package after several months of partisan stalemate. Democrats have generally favored a larger aid package with a greater scope, while Republicans have shown more support for targeted aid and less federal spending.
