Federal Reserve Chair Jerome Powell will be speaking about the “pandemic economy” with Congress again today.
On Tuesday, he told the Senate Banking Committee there are some signs of stabilization in the economy, and he reiterated the Fed’s intention to keep monetary policy as helpful as possible to aid the recovery.
But, he also said the decline in second-quarter economic growth will be the “most severe on record.” And he warned of long-term risks, from high unemployment to a rising wealth gap.
So, how’s this economy actually doing right now?
Retail sales are up more than 17%. Small businesses and consumer confidence is up strongly heading into summer.
“A lot of the recent headlines have made it seem like things are really good,” said economist Matt Speakman at Zillow.
Speakman said the economy is starting to turn around, after the historic declines of March and April.
“But, in reality, we have a long way to go,” he said.
Consumer spending, manufacturing and business investment are far below pre-pandemic levels. Unemployment is still higher than any time since the Great Depression.
And Mark Zandi at Moody’s Analytics said consumers and business owners still need help.
“If policymakers — Congress and the administration — can’t come up with another fiscal rescue package pretty soon, at least by their August recess, I don’t think the economy will continue to perform well, recession risks will rise,” Zandi said.
Powell has warned of other risks: the continued spread of COVID-19 infections and a surge in business bankruptcies.
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It’s still unclear. Congress and President Donald Trump are deciding whether to extend the extra $600 a week in unemployment benefits workers are getting because of the pandemic. Labor Secretary Eugene Scalia believes the program should not be extended, and White House economic adviser Larry Kudlow the additional money is disincentivizing some workers from returning to their jobs. Democrats want to keep providing the money until January.
As states lift restrictions, are people going back to stores and restaurants?
States have relaxed their restrictions, and many of us have relaxed, too. Some people have started to make exceptions for visiting restaurants, if only for outdoor dining. Some are only going to places they trust are being extra cautious. But no one we’ve talked to has really gone back to normal. People just aren’t quite there yet.
Will surges in COVID-19 cases mean a return to lockdowns?
In many areas where businesses are reopening, cases of COVID-19 are trending upwards, causing some to ask if the lockdowns were lifted too soon, and if residents and businesses might have to go through it all again. So, how likely is another lockdown, of some sort? The answer depends on who you ask. Many local officials are now bullish about keeping businesses open to salvage their economies. Health experts, though, are concerned.
You can find answers to more questions here.
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