Federal Reserve Board Chairman Jerome Powell, shown testifying before the Senate banking committee on September 24, Tuesday urged more economic stimulus to help the fragile U.S. recovery. File photo by Drew Angerer/UPI |
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Oct. 6 (UPI) -- Federal Reserve Chairman Jerome Powell on Tuesday urged policymakers to provide more economic and fiscal stimulus for the U.S. economy or risk the "unnecessary hardship" of a weak recovery.
Speaking during a virtual meeting of the National Association for Business Economics, Powell said that despite encouraging signs such as increased job creation and consumer spending on goods, Powell warned the economy still had "a long way to go" to completely recover from the shock of the coronavirus pandemic.
Skimping now on stimulus spending, he warned, could "lead to a weak recovery, creating unnecessary hardship for households and businesses" in the form of bankruptcies.
On the other hand, risks from overspending on stimulus measures "seem, for now, to be smaller," even if they ultimately prove to be unnecessary.
"The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods," he said.
Powell's call for increased stimulus came as the pace of the COVID-19 recovery is slowing. Even though the jobless rate has fallen to 7.9% in September from a pandemic peak of 14.7%, job gains have slowed from more than 1 million per month between May and August to 661,000 in September.
The White House, Senate Republicans and the Democratic-controlled House, meanwhile, remained deadlocked over the next proposed coronavirus relief bill.
The CARES Act, passed unanimously in March, provided $2.2 trillion in financial aid to businesses and the unemployed, but its follow-up is mired in political disagreements.
The House passed a $2.2 billion measure last week, including $600 in weekly unemployment benefits through January and a second round of $1,200 payments mailed to taxpayers as well as a $500 check for dependents.
But the measure is opposed by Republicans, who are looking to spend no more than $1 trillion.
Powell also warned that second wave of COVID-19 could produce "tragic" consequences, both for peoples' lives and the economy, and urged that Americans follow medical experts' guidance, "including using masks and social-distancing measures."
