A second wave of coronavirus could “more significantly limit economic activity, not to mention the tragic effects on lives and well-being,” Powell said. “Managing this risk as the expansion continues will require following medical experts’ guidance, including using masks and social-distancing measures.”
In addition to gaining control of the pandemic, Powell reiterated his calls for more fiscal stimulus aimed at supporting America’s most vulnerable.
Yet Powell said Tuesday that the risks of Congress pouring too much stimulus into the economy are far lower than the risk of not doing enough. Although government spending is adding to an already sky-high federal budget, lawmakers should act, Powell argued.
“The US federal budget is on an unsustainable path, has been for some time,” Powell said. But “this is not the time to give priority to those concerns.”
A prolonged slowing of the recovery is bad news, Powell said, “as weakness feeds on weakness.”
Unemployment and bankruptcies will always be part of the economy, he acknowledged. But having an “inappropriate” amount of either is bad for the longer term outlook. For example, the number of permanent layoffs has been rising after a large number of workers were initially classified has having temporarily lost their jobs.
“Once you’re permanently laid off it’s just difficult to get back into the workforce,” Powell said.
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