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Fed Chair: US must maintain grip on COVID to avoid economic tragedy

1 year 1 month 3 weeks ago Tuesday, October 06 2020 Oct 6, 2020 October 06, 2020 11:25 AM October 06, 2020 in News
Source: CNN

During the 2020 National Association for Business Economics meeting, Federal Reserve Chairman Jerome Powell warned that should a spike in COVID-19 cases within the United States be mishandled, the economic fallout would be detrimental, CNN reports.

During the annual meeting, which was held virtually Tuesday morning, Powell explained that a renewed rise in infections might again "more significantly limit economic activity, not to mention the tragic effects on lives and well-being."

He went on to advise that should such a spike occur it would be necessary, from both a medical and economic perspective, to follow health guidelines set out by the CDC. 

"Managing this risk as the expansion continues will require following medical experts' guidance, including using masks and social-distancing measures," Powell said.

Powell then explained why he's been suggesting additional fiscal stimulus that would shore up the funds of the country's most vulnerable populations, such as low-wage workers, women, and persons of color.

He said it would be better if Congress poured too much stimulus into the economy than hold back.

"By contrast the risks of 'overdoing it' for now seem to be smaller," Powell said. 

Within the past few months, stimulus negotiations seem to have reached a brick wall, and Powell said that even though government spending is adding to an already sky-high federal budget, lawmakers should act.

"The US federal budget is on an unsustainable path, has been for some time," he acknowledged. But went on to say,"this is not the time to give priority to those concerns."

As of late, the country's economic recovery has slowed in pace.

For example, CNN reports, after adding more than a million jobs every month between May and August, last week's September jobs reported showed only 661,000 jobs were added back to the economy, fewer than expected.

A prolonged slowing of the recovery is a bad sign, Powell warned, "as weakness feeds on weakness."

The Federal Reserve Chairman also pointed to more optimistic statistics.

"The recovery has progressed more quickly than generally expected," Powell said.

He then referenced a September meeting in which it was revealed that the recovery was likely to continue at a solid pace, with unemployment declining to four percent by the end of 2023.

However, he warned that such a positive outlook depends on the country's ability to get a handle on COVID-19. 

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