Lack of fiscal support poses downside risk to US economy: Fed chief

WASHINGTON, May 1, 2019 (Xinhua) — U.S. Federal Reserve Chairman Jerome Powell speaks during a press conference in Washington D.C., the United States, on May 1, 2019. The U.S. Federal Reserve on Wednesday left interest rates unchanged despite pressure from President Donald Trump to lower rates and boost economic growth. (Xinhua/Ting Shen/IANS)

Washington, Sep 25 (IANS) US Federal Reserve Chairman Jerome Powell said that the lack of further fiscal support would pose a downside risk to the American economy, which is recovering from the cornavirus-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 on Thursday.

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 was quoted as saying by Xinhua news agency.

“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.

At the same hearing on Thursday, Treasury Secretary Steven Mnuchin said 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.

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 relief proposal in May, which didn’t gain support from Republicans.

Senate Republicans put forward a $1 trillion package in late July, and failed to advance a slimmed-down proposal earlier this month.

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