WASHINGTON – Strong financial support from the government and the Federal Reserve spurred a strong recovery from the pandemic recession, but the rebound could falter without further help, Fed Chairman Jerome Powell has warned Tuesday
Powell said government support – including increased unemployment insurance payments, direct payments to most US households, and financial support to small businesses – has so far prevented a « spiral » descending « recession in which job losses would cut spending, forcing companies to cut even more jobs
But the US economy still faces threats, and without further support these downward trends could still emerge, he said
“The expansion is still far from over,” Powell said in a speech to the National Association for Business Economics, a group of business economists and academics. “Insufficient support would lead to a weak recovery, creating unnecessary hardship for households and businesses Over time, household bankruptcies and business failures would increase, harming the economy’s productive capacity and slowing wage growth «
Powell noted that the economic recovery has slowed in recent months compared to its rapid improvement in May and June Incomes fell in August, the Commerce Department said last week, and job growth s’ was weakened in September, falling to just 661,000, less than half of the gains of 15 million in August and 18 million in September
« A prolonged slowdown in the pace of improvement over time could trigger typical recession dynamics, as weakness feeds on weakness, » he said
Powell has repeatedly urged Congress to provide additional impetus, in previous speeches and testimony to Congress Negotiations between House of Commons Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are ongoing , but prospects for a deal seem bleak
The president also referred to the Fed’s new framework for its interest rate policy, but did not provide new details on how it will work in practice Last month, the Fed said that » it was now looking to push inflation above 2% « for a while » before raising rates This was a substantial change from its previous approach, which potentially involved rate hikes once unemployment fell too low or inflation hit 2%.
Jerome Powell, Federal Reserve System, Chairman, US Federal Reserve, Equities
Global News – US – Federal Reserve Powell calls for more stimulus: ‘Too little support would lead to a weak recovery’
