Fed’s Jerome Powell Calls For More Economic Aid, Warning ‘Weakness Feeds On Weakness’

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Federal Reserve Chairman Jerome Powell testifies last month during a House Select Subcommittee on the Coronavirus Crisis hearing. Powell continues to warn the U.S. economy needs more stimulus to recover from the pandemic.

Kevin Dietsch/AP

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Kevin Dietsch/AP

Economy
Transcript: NPR’s Full Interview With Fed Chairman Jerome Powell

He also warned the group that without additional support, the economy could slip into a downward spiral «as weakness feeds on weakness.

«A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy, Powell said. «That would be tragic, especially in light of our country’s progress on these issues in the years leading up to the pandemic.

Congress passed several stimulus bills earlier in the pandemic, including the $2.2 trillion CARES Act, which provided for additional unemployment benefits of up to $600 a week for many individuals.

However, most of the aid provided by Congress has expired.

Over the weekend, Trump seemed eager for additional relief, tweeting, «OUR GREAT USA WANTS & NEEDS STIMULUS.

But by Tuesday afternoon, the president had changed course, rejecting Democratic House Speaker Nancy Pelosi’s call for an additional $2.4 trillion dollars in aid.

«I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business, Trump tweeted.

The president’s move sent the stock market tumbling.

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Powell credited the «extraordinary relief measures passed early in the pandemic with helping to avoid a deeper recession and setting the stage for a partial rebound.

But recent indicators have shown the economic recovery is starting to slow as infections continue to spread. The labor market also remains under stress: Almost half the 22 million jobs lost in the spring have not been replaced.

Powell said Tuesday it may be some time before people whose jobs require a lot of in-person contact can safely return to work.

«While the combined effects of fiscal and monetary policy have aided the solid recovery of the labor market so far, there is still a long way to go, the Fed chairman said.

«The right thing to do and the smart thing to do is to continue to support those people as they return to their old jobs or find new jobs in different sectors of the economy, Powell added.

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Unemployment, which peaked at 14.7% in April, fell to 7.9% last month. But Powell cautioned the jobless rate would be closer to 11% were it not for misclassification of idle workers and for people leaving the workforce.

Powell noted that job losses in the service sector have fallen particularly hard on women and minorities. And women with children are disproportionately affected by the demands of home schooling.

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As the new school year began last month, four times as many women dropped out of the workforce as men.

«The longer it goes on, the more likely there is some lasting damage, Powell said. «For many people, and it’s a lot of women, it’s winding up being in the home with young children who really should be in school and you would much prefer to be working. So it’s a real issue.