Fed Chief Testifies on Economy’s ‘Marked’ Progress: Live Updates

Treasury Secretary Steven Mnuchin offered an upbeat view of the economic recovery on Tuesday, describing it during a congressional hearing as the fastest rebound from any crisis in American history.

Yet Mr. Mnuchin acknowledged that more than half of the jobs that had been lost as a result of the pandemic had yet to be restored.

His comments came in a joint appearance before the House Financial Services Committee with Jerome H. Powell, the chair of the Federal Reserve.

Both officials projected optimism about the economic recovery so far, but Mr. Powell made clear that many of those gains were predicated on strong fiscal support, including additional jobless benefits and stimulus checks. That economic support has largely run out and lawmakers show little indication of being able to agree on another package despite the fact that millions of people remain out of work.

Mr. Powell told Congress that the economy had made meaningful progress but that the outlook was uncertain and policymakers will need to do more.

“Many economic indicators show marked improvement,” Mr. Powell said in his testimony, crediting policies like expanded unemployment insurance, which expired at the end of July. “Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.”

Mr. Powell said the path forward would depend on virus control and “policy actions taken at all levels of government,” according to his remarks prepared for delivery.

Mr. Mnuchin projected “tremendous” economic growth in the third quarter, noting increases in business activity, manufacturing and the housing market. He said that the 8.4 percent jobless rate was a “notable achievement” considering his own projections earlier this year that unemployment could hit 25 percent.

Nonetheless, Mr. Mnuchin said that more stimulus was needed and that he would continue working with Congress to strike a deal.

“The President and I remain committed to providing support for American workers and businesses,” Mr. Mnuchin said. “I believe a targeted package is still needed, and the administration is ready to reach a bipartisan agreement.”

Mr. Powell also addressed the Main Street lending program, an effort to make loans to midsize businesses that is supported by congressional funding appropriated to the Treasury Department. The Fed and the Treasury have faced criticism for the effort, which is structured in a fairly risk-averse way and which is using hardly any of its $600 billion in capacity.

The program has made or is in the process of making about 230 loans totaling roughly $2 billion, according to Mr. Powell’s statement. But he stressed the limits of loan programs and suggest that congressional spending might be more appropriate in some instances.

“Many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer,” he said in his testimony. “In these cases, direct fiscal support may be needed.”

Under questioning from Representative Maxine Waters, the committee chair, about whether the program could be broadened to help more companies, Mr. Mnuchin said there were limits to what could be done with the existing funds that were created to backstop the Fed facilities. But Mr. Mnuchin said that he would like to see legislation that would “reallocate that money to better use.”

Article source: https://www.nytimes.com/live/2020/09/22/business/stock-market-today-coronavirus