On Wednesday, Federal Reserve Chairman Jerome Powell said that Congress and the White House may need to complete more actions. They need the sections to pull the U.S. out of the “the worst economic downturn since the Great Depression,” reported Fox Business.
“The coronavirus crisis raises longer-term concerns as well. Deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell said. “Avoidable household and business insolvencies can weigh on growth for years to come.”
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According to Powell, avoiding these outcomes may require more policy measures from the government.
Stimulus Packages During the Crisis
Congress has so far passed four stimulus packages totaling around $3 trillion. They did so to reduce the negative effects of the outbreak to the economy. That includes the $2.2 trillion CARES Act signed into law at the end of March.
“Additional fiscal support could be costly,” Powell said. However, this worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” Powell said. “This tradeoff is one for our elected representatives, who wield powers of taxation and spending,” he added.
Fox Business reported that House Democrats unveiled a $3 trillion coronavirus relief bill. However, according to them, “it faces a steep path to passage in the Republican-controlled Senate.”
The Fed has also done its part in supporting the economy. The things the WoL can do include such as launching crisis-era lending facilities to ensure that credit flows to households and businesses. However, Powell said those actions may not be the “final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.”
“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.