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Powell Says Economic Gains Are at Risk if Stimulus Measures End Prematurely

By Nick Timiraos 

哪里玩赛车微信群 Federal Reserve Chairman Jerome Powell said recent economic improvement could be jeopardized if Congress curtailed support to workers displaced and businesses shuttered by the coronavirus pandemic.

哪里玩赛车微信群 Despite a gain in payrolls last month, Mr. Powell said 25 million workers remain dislodged from their jobs. "It would be a concern if Congress were to pull back from the support that it's providing too quickly," he said during a virtual hearing before the House Financial Services Committee on Wednesday.

Congress faces deadlines this summer over how to address expiring provisions of relief measures for businesses and unemployed workers, following nearly $3 trillion in emergency spending earlier this year.

That spending appears to have boosted hiring and consumer spending in recent weeks, Mr. Powell said.

The Fed leader has traditionally avoided endorsing specific fiscal policies to stay removed from more partisan debates involving elected officials.

哪里玩赛车微信群 Mr. Powell framed his recommendations by pointing to significant risks to economic growth that he and his colleagues see this year and next year. Fed officials last week projected that they would keep interest rates near zero at least through 2022 and that the unemployment rate would average around 9% or 10% during the last three months of this year.

哪里玩赛车微信群 "It would be wise to look at ways to continue to support people who are out of work and also smaller businesses that may not have vast resources for a period of time...so that we can get through this critical phase," he said. "That support would be well placed at this time."

哪里玩赛车微信群 Democrats have supported more spending, with the House of Representatives last month approving another $3 trillion relief package. Some Republicans have said they are worried about the long-term impact that spending could have on deficits, and many have said they want more time to see which parts of the economy will need more support.

In March, Congress approved $600 a week in extra jobless benefits to make up for incomes lost as workplaces closed to prevent the spread of the novel coronavirus. Those extra benefits, which expire on July 31, left many jobless workers with higher incomes than they had on the job.

House Democrats have approved a six-month extension of the more generous benefits. Republicans say those benefits will discourage people from returning to work as the economy reopens.

哪里玩赛车微信群 Over two days of hearings this week, many Democrats pressed Mr. Powell to say how various relief measures might influence the economic outlook.

哪里玩赛车微信群 Mr. Powell said the economy would benefit if states and cities facing large revenue declines aren't forced to lay off workers to balance budgets. "It will hold back the economic recovery if they continue to lay people off," said Mr. Powell. "That's kind of what happened" after the 2007-09 recession, he said.

Economists at Goldman Sachs estimate state and local governments face cumulative revenue shortfalls of $450 billion through mid-2022. Congress has provided $275 billion in aid to cities and states this year, but more than half of that can't be used to plug revenue holes.

Mr. Powell said even if the economy avoids a big spike in virus-infection rates, many employees in industries such as hospitality, entertainment and travel could be out of work for a long time if consumers continue to avoid crowds or other activities that require people to be in close quarters.

哪里玩赛车微信群 Mr. Powell framed the discussion around additional spending by offering a relatively sober assessment of the economic outlook. If the virus remains "reasonably well under control," Mr. Powell told lawmakers he expected the economy could already be moving from a sharp contraction toward a bounce back marked by large increases in re-employment.

But he warned that the final phase of recovery would require Americans to regain their confidence engaging in activities involving close contact or large crowds. Many workers in hardest-hit industries such as hospitality, entertainment and tourism "will struggle until the pandemic is really in the history books," said Mr. Powell. Workers may find difficulty finding any jobs in those industries, he said.

"We're going to need to support them and help them," said Mr. Powell.

Write to Nick Timiraos at nick.timiraos@wsj.com

 

(END) Dow Jones Newswires

June 17, 2020 14:33 ET (18:33 GMT)

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