(Photo : Photo by Toni L. Sandys-Pool/Getty Images)
WASHINGTON, DC - SEPTEMBER 24: Jerome H. Powell, Chairman, Board of Governors of the Federal Reserve System, right, during the Senate's Committee on Banking, Housing, and Urban Affairs hearing examining the quarterly CARES Act report to Congress on September 24, 2020 in Washington, DC. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is a $2.2 trillion economic stimulus bill passed in response to the economic fallout of the COVID-19 pandemic in the United States.
Jerome Powell, the chairman of the Federal Reserve, called on the government to spend more in the upcoming stimulus bill order to support and aid the US economy in recovering from the COVID-19 pandemic, Tuesday.
In a virtual speech he rendered during the National Association for Business Economics, Powell stated that both the Congress and the central bank should up their efforts in helping the economy survive. He urged them to continue such efforts despite the fact that several key measures of economic recovery have already bounced back, including consumer spending and employment.
Moreover, the Fed Reserve chair stated that there is a very low risk for policymakers to "overdo" a stimulus bill. He also added that allotting very little support may result in weakening the recovery of the economy through hurting productivity and wage growth and leading more businesses into bankruptcy, New York Post reported.
Powell also emphasized that even if the stimulus policies prove in the end that it was greater than what was necessary, it is still not going waste. He noted that the recovery of the economy will be faster and greater if the fiscal and monetary police work hand in hand in supporting the economy until it reaches full recovery.
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Fed Officials Back Powell in Pushing for More Stimulus Spending
Moreover, other Fed officials also backed Powell as he called on Congress to pass another stimulus spending package to lessen the economic damage caused by the pandemic. He also stated that the economy has taken a serious blow after the central bank put in trillions of dollars in financial markets with lowered interest rates which are almost zero.
Powell's comments followed the recent talks between the Trump administration and House Speaker Nancy Pelosi in order to hash out a new stimulus package deal. Trump had recently expressed his support for a higher spending stimulus bill, however, walks were slightly paused after the president was hospitalized due to COVID-19.
According to The Financial Times, while the talks between Pelosi and Steven Mnuchin, the Secretary of the US Treasury have already resumed, it is still uncertain that a new stimulus deal will be reached soon.
In addition, Powell stated that the recovery of the economy remains incomplete despite the fact that the stimulus efforts, including the 2.2 trillion CARES Act that was passed in March have already prevented the economy from totally falling into the gutter.
On top of this, Powell stated that the burden brought by the economic downturn has not been evenly shared among the citizens since people of color and women have suffered higher rates of unemployment compared to others.
The pandemic is further widening divides in wealth and economic mobility, " he noted.
Meanwhile, Pelosi and Mnuchin are already continuing their negotiations on a new stimulus deal, however, it was stated that the possibility of a fiscal package before the election is very small.
Moreover, Don Kohn, who the former Vice-chair of the Fed stated that while he believes that Powell is doing the right thing, his calls may not be heard at the moment since the congregation is preoccupied with a separate matter at the moment, which is the upcoming election. He also noted that the Fed chair's message may be discussed again after the 3rd of November.
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