Fed Chair says US economy ‘extraordinarily uncertain’, urges Congress for more stimulus

*Federal Reserve Chairman Jerome Powell discloses that a full economic recovery is unlikely until Americans are confident that it is safe to re-engage in a broad range of activities, just as key provisions of the CARES Act expire at the end of December 2020

Isola Moses | ConsumerConnect

As many may have wondered why the United States (US) Congress and the Trump administration haven’t been able to enact another round of stimulus to help struggling American consumers since, Federal Reserve Chairman Jerome Powell is on the same page.

Powell in prepared remarks to the Senate Finance Committee Tuesday, December 1, said the American economy needs more help, and it needs it soon.

Focusing primarily on the money Congress appropriated for the Fed’s lending programmes, the Fed Chairman credited that move with keeping the economy afloat during the Coronavirus (COVID-19) pandemic.

He stated: “These programmes serve as a backstop to key credit markets and have helped restore the flow of credit from private lenders through normal channels.”

He informed the Senate Finance Committee that “we have deployed these lending powers to an unprecedented extent.”

There’s $455 billion of CARES Act funds that have not been spent.

Powell has asked that it be released for the Fed’s lending efforts, but Treasury Secretary Steven Mnuchin says the Trump administration thinks it would be better spent in providing aid directly to Americans and small businesses.

Amid the spikes in virus cases in the country, Republicans and Democrats in Congress have not been able to agree on another round of stimulus help, even though both sides agree on several basic principles — direct payments to Americans and help for small businesses.

Report said the issue had taken on greater urgency with the arrival of December since several key provisions of the CARES Act expire at the end of this month.

These include:

A moratorium on evictions for renters; Suspended payments on student loans; A tax credit for companies that retain their workforce; $150 billion in aid to state and local government cannot be rolled into 2021; A 13-week extension of unemployment benefits; and Unemployment benefits for freelancers and contract workers.

When these provisions expire at the end of the month, renters who are behind on their payments can be evicted, student loan borrowers must resume payments, businesses rewarded by the government for not laying off employees will no longer have that benefit, and millions of Americans could lose their unemployment benefits.

Rep. David Price (D-N.C.), a senior member of the House Appropriations Committee, told the Wall Street Journal that “everything gets much worse on Dec. 31, with a lot of money running out and a lot of people in desperate straits.”

Observers believe though a vaccine may be in sight, it could be months before a significant portion of the population is inoculated.

In the meantime, Powell says the outlook for the economy is “extraordinarily uncertain.”

A full economic recovery is unlikely until Americans are confident that it is safe to reengage in a broad range of activities, said the Fed Chairman.

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