Former Dallas Fed consultant and CEO and chief strategist at Quill Intelligence LLC Danielle DiMartino Booth on economic recovery and whether the U.S. needs additional stimulation for the coronavirus.
Federal Reserve President Jerome Powell said on Thursday that the US economy could return to the pre-pandemic coronavirus level “very soon” thanks to a torrent of monetary and fiscal aid last year.
The nearly $ 4 trillion in direct fiscal stimulus approved by Congress and the Trump administration – including the $ 2.2 trillion CARES Act and the $ 900 billion relief bill passed in December – played a vital role in avoid further economic damage, Powell said.
Although he emphasized that the economy will not fully recover until the pandemic is under control, the central bank president said he was “optimistic” about the prospects for “the coming years”.
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“You are in a situation where we could be back to the old economic peak soon and overcome it,” said Powell during a virtual webcast with Princeton University. “We can get around a lot of the damage that worried us people of low and moderate income, who, by the way, still have very high unemployment, but with the reopening of the service economy later this year, we hope we can go back there. “
In the space of just two months, the coronavirus pandemic and the economic downturn it has unleashed have eliminated more than 20 million jobs, a rate never seen since the Great Depression. Before the crisis began, unemployment was at least half a century old.
The US economy has so far recovered about half of the jobs lost, with about 9.8 million more unemployed Americans now than in February. The unemployment rate is 6.7%.
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The outbreak was also a catalyst for bankruptcies between small and large companies, and caused an unprecedented contraction of 33.3% in the country’s GDP in the second quarter.
The Fed responded to the pandemic by taking a series of extraordinary actions to support the economy, including cutting interest rates to almost zero, buying an unlimited amount of Treasury bills (a practice known as quantitative easing) and launching era-era lending facilities. crisis to ensure that credit flows to families and businesses.
“What interests us most is to return to a strong job market quickly enough that people’s lives are back to how they want to be,” said Powell. “We were in a good place in February 2020 and we think we can go back there, I would say, much sooner than we feared.”
More help may be on the way: President-elect Joe Biden is due to reveal his long-awaited proposal to stimulate coronavirus on Thursday night, amid new evidence that an increase in COVID-19 cases across the country is hurting the country’s recovery.
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The plan, which may be priced at least $ 1.5 trillion, is widely expected to include a $ 1,400 stimulus check commitment, an extension of supplementary unemployment benefits that are due to expire in March, financing for vaccine distribution and aid to the state and local governments. The $ 1,400 payments would be in addition to the $ 600 that most Americans received this month, bringing the total amount of the check to $ 2,000.