Federal Reserve Chairman Jerome Powell refused to comment on Thursday about the cliffhanger United States presidential election as he rolled out a wishlist of measures to help the nation’s economic recovery, including another round of virus relief aid from Congress and more mask-wearing by Americans.
At a virtual news conference following a two-day policy meeting, during which Fed officials voted unanimously to leave interest rates near zero, Powell said that economic growth and the jobs market are recovering, but improvements are “moderating” and both are still well below pre-pandemic levels.
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Characterising the surge in COVID-19 cases in the US and abroad as “particularly concerning”, Powell said the economic outlook remained “extraordinarily uncertain” and that much depended on keeping the virus in check.
“Following the advice of public health professionals to keep appropriate social distances and to wear masks in public will help get the economy back to full strength,” he said.
Noting that millions of people are still unemployed as a result of the coronavirus crisis, Powell reminded the nation that the downturn is not falling equally on all Americans.
“The high level of joblessness has been especially severe for low-wage workers in the services sector, for women, and for African Americans and Hispanics,” he said.
Powell reiterated the Fed’s commitment to use its full range of policy tools to nurse the economy back to full health. But he signalled again that the Fed cannot shoulder the recovery burden alone, saying that “fiscal policy” – Fed speak for Congressional stimulus measures – is “one of the main reasons why the recovery has been as good as it’s been so far.”
Key stimulus measures Congress passed earlier this year, including a $600 federal weekly top-up to state unemployment benefits and a programme to help small businesses keep workers on their payrolls, expired in July.
The lapsing of such programmes, said Powell, could cause households to run through their savings, which, along with spiking virus cases, pose risks to the economic rebound that would “well be addressed through more fiscal policy”.
“I think we’ll have a stronger recovery if we can just get at least some more fiscal support when it’s appropriate,” said Powell.
On Wednesday, Senate Majority Leader Mitch McConnell, a Republican, said he would like to see another round of virus relief aid passed before the year is out. But as the odds narrow for Democrats to gain control of the Senate, expectations are growing that Congress will likely pass a slimmed-down stimulus package.
As usual, Powell refused to be drawn in by reporters looking for him to elaborate on what he thinks Congress should do.
“Obviously, it’s for Congress to decide the timing, size, and components” of its fiscal support for the economy, said Powell.
But against the backdrop of one of the most divisive US elections in living memory, Powell did highlight that moving the economy past the ravages of the pandemic will require broad cooperation.
“We’ve always said this will take a whole-of-government approach, including healthcare policy and fiscal policy, too,” he said. ” So, it really is if you want to get the economy back as quickly as possible to where we want it to be, then really, it should be all of government working together.”