Federal Reserve warns of economic chaos if US can’t control covid

Last Updated on October 7, 2020 by Admin

(Político) – Federal Reserve Chair Jerome Powell on Tuesday said Congress should err on the side of overdoing it with the next economic relief bill, saying a conservative approach could imperil a rebound from the coronavirus recession.

In remarks to the National Association for Business Economics annual meeting, Powell warned of a “tragic” scenario where “a long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy.” He said too little support from policymakers would “lead to a weak recovery, creating unnecessary hardship for households and businesses.”

Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth,” he said. “By contrast, the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they will not go to waste.”

Powell issued the warning as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continue negotiations over potential economic relief legislation. They have been at odds over the size of the deal, and it’s unclear if they will be able to reach an agreement.

In a statement released just after Powell’s appearance, Pelosi quoted the Fed chair’s speech and said the moment was “long overdue” for Republicans to agree on a bill.

Beyond potential relief efforts, Powell said another key measure to fending off a further downturn would be to follow medical experts’ guidance during the pandemic “including using masks and social-distancing measures.” President Donald Trump has flouted those safeguards in recent days during his treatment for Covid-19.