COVID19 CLASS WAR

Fed Chair Powell says more action may be needed to fend off economic ruin.

BUSINESS INSIDER MAY 13, 2020

The economic recovery from the coronavirus pandemic may be a slow one, Federal Reserve Chair Jerome Powell said in a Wednesday event for the Peterson Institute for International Economics.

He added that more fiscal support could be necessary to avoid long-term economic damage.

"While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks," Powell said.

Federal Reserve Chair Jerome Powell cautioned on Wednesday that the US economic recovery from the fallout of the coronavirus would likely be slow and require more fiscal stimulus.

The recovery "may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems," Powell said in an event for the Peterson Institute for International Economics.

He continued: "Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery."

Powell's remarks came two months into the worst economic downturn since the Great Depression. In April, the US economy lost a record 20.5 million jobs and saw the unemployment rate spike to 14.7%.

Long stretches of unemployment can leave families in greater debt, Powell said. And losing thousands of small and medium-sized businesses "would destroy the life's work and family legacy of many business and community leaders and limit the strength of the recovery when it comes," he said.

Powell cheered the actions of the government so far, noting how swiftly different groups had acted to send relief to Americans. The Federal Open Market Committee slashed interest rates to zero in March and has since gone beyond its 2008 playbook with emergency lending and buying programs to support the economy.
Congress has allocated nearly $3 trillion in funding to support small businesses, American households, and more.

Still, there could be more to come. "While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks," Powell said.

House Democrats on Tuesday proposed an additional $3 trillion coronavirus relief bill. The Fed also took another unprecedented step this week when it began buying corporate bond exchange-traded funds.

When the crisis subsides, the central bank will "put these emergency tools away," Powell said. Still, he reaffirmed the central bank's "whatever it takes" approach to provide support until the crisis has passed and the economic recovery is underway.

Fed Chair Powell just said 40% of households making less than $40,000 a year lost a job in March

BUSINESS INSIDER MAY 12, 2020

Powell said that around 40% of Americans earning less than $40,000 a year lost a job in March, citing a Fed study set to be published on Thursday.

"This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future," he said during a webinar.

Powell also called for further economic relief to shore up a battered economy ravaged by the pandemic.

Fed Chair Jerome Powell said on Tuesday that a substantial portion of lower-income Americans had been laid off in March.

"A Fed survey being released tomorrow reflects findings similar to many others: Among people who were working in February, almost 40% of those in households making less than $40,000 a year had lost a job in March," Powell said in a webinar at the Peterson Institute for International Economics.

"This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future," he said.

The alarming statistic set to be published in Thursday's Fed study underscores the severe pain felt among low-income workers and their families during the pandemic. Many of those jobs are concentrated in the service sector, which are less likely to have benefits like paid sick leave or the ability for employees to work from home.

A survey from the Pew Research Center released in April also found that one in four lower-income adults had any savings to cushion financial shocks caused by job losses or other emergencies.

Powell recognized the scale of the economic damage wrought by the virus. He also called for additional relief measures to further shore up a battered economy.

"Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," he said.

Over 33 million Americans have filed for unemployment in the past two months, as scores of businesses shuttered and people stayed home to curb the spread of the virus.

Democrats recently unveiled a $3 trillion spending proposal aiming to extend additional lifelines to states, businesses, and people weathering the pandemic. But Republicans declared it dead-on-arrival in the Senate.