Bolstering progressive demands for policymakers to provide greater stimulus to avoid worsening the already catastrophic economic effects of the coronavirus pandemic, Federal Reserve Chair Jerome Powell warned Tuesday that insufficient government intervention “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
In a speech delivered virtually at the annual meeting of the National Association for Business Economics, Powell said that public support and financial aid has helped soften some of the negative impacts of the coronavirus crisis on households and businesses, with the “infusion of funds” preventing “a downward spiral in which layoffs lead to still lower demand, and subsequent additional layoffs.”
While the unemployment rate has fallen from nearly 15% in April to just under 8% now, Powell explained that a “broader measure that better captures current labor market conditions—by adjusting for mistaken characterizations of job status, and for the decline in labor force participation since February—is running around 11 percent,” signaling the “need for further support.” Continue reading.