Federal Reserve Chairman Jerome Powell on Tuesday informed Congress that the economic recovery for people severely hurt by the pandemic would gain strength with another relief package.
“It will go faster for those people if we have all of government working together,” he told the House Financial Services Committee during a hearing on the federal government’s response to the coronavirus.
Powell would not weigh in on what should be included in that package.
“The details of that are between Congress and the administration, not for the Fed to say,” he said.
Powell appeared before the House committee with Treasury Secretary Steven Mnuchin, who said that the next package should be targeted at helping families and small businesses.
“It should be focused on kids and jobs and areas of the country that are still hard-hit, particularly areas such as the travel business, and others, restaurants. I think there is broad bipartisan support for extending the [Payroll Protection Program] to businesses that have had revenue drops for a second check. I think small businesses are a large priority in that,” Mnuchin said.
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Powell noted in prepared testimony that the economy has shown ‘marked improvement’ from the second quarter this year when much of the nation was shut down to slow the spread of the coronavirus.
Mnuchin, in his prepared remarks, said he expects that there will be strong growth in the third quarter.
“I believe we will see tremendous third-quarter growth, fueled by strong retail sales, housing starts and existing home sales, manufacturing growth, and increased business activity,” Mnuchin said.
Despite the economic improvements, Powell cautioned that the economy would not get back to pre-pandemic levels until the coronavirus is under control.
“A full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities. The path forward will depend on keeping the virus under control and on policy actions taken at all levels of government,” he said.
Powell last week warned of “downside risks” if Congress fails to pass another relief package aimed at helping the economy survive the pandemic.
Powell noted that roughly half of the jobs lost during the pandemic have been regained. However, many of those still looking for work come from industries hurt by the virus, and it could take them a long time to find employment.
Currently, the prospects that Congress passes another relief package are murky, as talks between the parties have essentially fizzled.
Mnuchin, who has engaged with House Speaker Nancy Pelosi, a California Democrat, on creating another relief bill, told the committee that the administration remains committed to getting an additional relief plan enacted this year.
