U.S. Federal Reserve Chairman Jerome Powell said on Thursday that the lack of further fiscal support would pose a downside risk to the U.S. economy, which is recovering from the COVID-19 induced recession.
“While the economy has been doing better than expected, I think there’s downside risk to that if there is no further fiscal support,” Powell said at a hearing before the Senate Banking Committee.
There are roughly 11 million Americans who have lost jobs during the pandemic and those people are able to spend now because of government assistance such as enhanced unemployment insurance, Powell noted.
“There’s downside risk to the economy probably coming if some form of that support doesn’t continue,” he said.
While the extra federal unemployment benefits for roughly 30 million Americans expired at the end of July, congressional lawmakers and the Trump administration remain deadlocked over the next COVID-19 relief package.
U.S. Treasury Secretary Steven Mnuchin said Thursday at the same hearing that a targeted relief package is still needed and the administration is ready to reach a bipartisan agreement.
“I believe there is significant bipartisan support for legislation that supports kids and jobs particularly for extending the PPP to those hardest hit industries that need a second payment,” Mnuchin said, referring to the Paycheck Protection Program for small businesses.
U.S. House Speaker Nancy Pelosi on Thursday again urged Republicans to support bigger COVID-19 relief package to blunt the economic fallout.
“We came down a trillion dollars in our $3.4 trillion bill, then we offered to meet the Republicans halfway. We still haven’t heard back about that,” Pelosi said at a weekly press conference.
“We need more money for small businesses, restaurants, airlines and many other key priorities,” she said.
House Democrats unveiled a 3-trillion-U.S.-dollar relief proposal in May, which didn’t gain support from Republicans. Senate Republicans put forward a 1-trillion-dollar package in late July, and failed to advance a slimmed-down proposal earlier this month.