(TheFreedomFlag.com)- Jerome Powell, the chairman of the Federal Reserve, said Tuesday that there are very challenging times ahead as the country works to build an economic recovery.
While the economy has been on the slow but steady rebound for a few months now, Powell said there are still plenty of dangers that the economy could reverse again.
At the annual meeting of the National Association for Business Economics on Tuesday, Powell said the biggest immediate threat to the economy is a continued rise in coronavirus infections.
Powell second a second wave in the fall could “more significantly limit economic activity, not to mention the tragic effects on lives and well-being. Managing this risk as the expansion continues will require following medical experts’ guidance, including using masks and social-distancing measures.”
Controlling the pandemic from a health standpoint is only one half of the battle economically, though. Powell said it’s essential that the federal government comes together to pass more economic stimulus funds to help support the economy.
Negotiations on another economic stimulus package have been at a standstill for months now. While House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been talking and meeting for more than a week now, the sides remain far apart.
House Democrats last proposed a $2.2 trillion spending plan, while White House negotiators have offered a $1.5 trillion package. Even that level of spending might be too high for Senate Republicans, though, who have continually said they prefer a more limited spending package at or below the $1 trillion mark.
Powell said while there are risks of the government putting too much stimulus money into the economy, the risks of not putting any more in are far greater. That means lawmakers need to act and act quickly, he said.
“The U.S. federal budget is on an unsustainable path, has been for some time,” according to Powell, but “this is not the time to give priority to those concerns.”
The Federal Reserve has been doing its best to help support the economy and stimulate economic growth during the pandemic. They cut interest rates to near zero levels back in March and have said they will keep them that low for as long as necessary — until at least 2023, officials have said. The Fed also implemented a variety of loan programs to support different portions of the economy.
The immediate positive effects from the Fed’s policies and Congress’ economic stimulus packages of the spring are starting to wear off, though. While the economy added more than 1 million jobs for every month from May through August, the September jobs report released last week showed only 661,000 jobs were added to the economy.
Not only is that a significantly lower mark than in previous months, but it was much lower than what many analysts had expected. Powell said this is just one sign that the economic recovery is slowing considerably, and that more economic help from the federal government is needed.