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Federal Reserve Chairman Jerome Powell is testifying Wednesday before the House Select Subcommittee on the Coronavirus Crisis to detail the central bank’s efforts to ease the financial burden faced by American business amid the Covid-19 pandemic.
It marks the second straight day of testimony from the Fed chief, who with Treasury Secretary Steven Mnuchin on Tuesday addressed the House Financial Services Committee.
The Fed and the Treasury Department have worked in tandem since March to supply households and businesses with liquidity and financial support through a cocktail of emergency policy initiatives and programs like the Paycheck Protection Program and the Main Street lending facility.
Those efforts helped soften the impact of Covid-19 on U.S. commerce, which earlier this year hit an abrupt halt amid efforts to slow to spread of the virus.
And even though the Fed chief said the U.S. still looks like it’s in an economic rebound, Powell warned Tuesday that there is still a risk of deceleration in U.S. economic activity without additional fiscal stimulus from Congress as Americans opt to stay away from crowded venues like restaurants or salons.
“I would say many, most, [forecasters] assume some fiscal action. Fiscal action underlies many, many current forecasts,” Powell told lawmakers on Tuesday.
He added that Americans could deplete their savings as they look for employment in the months ahead if Congress doesn’t act to reenact unemployment benefits or direct stimulus payments.
“The risk is that, over time, they go through those savings, they haven’t been able to find employment yet because it’s going to take a while to get 11 million people back to work, so their spending will decline,” he added. Their ability to stay in their homes will decline. So, the economy will begin to feel those negative effects at some time.”
