Powell Says Economic Risks Persist Despite Vaccine: Live Updates
Jerome H. Powell, the chair of the Federal Reserve, said surging coronavirus cases pose a major risk to the United States economic outlook, and that while progress toward a vaccine is good news for the medium-term, it is to soon to account for it with any confidence.
“Even in the best case, widespread vaccination is months in the future,” Mr. Powell said, noting that there is a risk that “people will lose confidence” and pull back from economic activity in the near-term as the virus spreads and they try to avoid infection.
“It’s probably too soon to say with any confidence” what the economic impact of potential vaccines might be, Mr. Powell said. Two pharmaceutical companies, Pfizer and Moderna, have announced positive trial results in recent days. The Fed chair underlined that many uncertainties surrounding timing, manufacturing and distribution remain.
Mr. Powell also warned that the ongoing economic fallout caused by the pandemic could scar the economy, both by inflicting lasting damage on worker résumés and by pushing companies out of business. He warned that women in particular may face career damage as they leave the work force in big numbers.
“From the very start, we’ve been concerned about longer-run damage to the productive capacity of the economy,” Mr. Powell said. “We’ve got a long way to go.”
Service workers may need more support as they reshuffle into new types of jobs, he said. Mr. Powell and his colleagues have repeatedly suggested that Congress might need to provide additional aid to workers and companies, as key pandemic relief programs have expired and left families and businesses without much of an ongoing backstop.
“We’re not going back to the same economy,” he said, adding that the Fed, for its part, will continue to support the economy “for as long as it takes, until the job is well and truly done.”
The central bank has cut rates to near-zero, bought huge quantities of government-backed debt, and offered emergency loans in a bid to shore up the economy in the face of the pandemic. Those programs cannot directly get money into hands of those who have lost jobs and customers, but by making credit cheaper, they can help to fuel economic activity overall.
Mr. Powell signaled that he favors keeping the Fed’s emergency lending programs, many of which will need to be extended to continue past Dec. 31, in place. There are questions about whether the Treasury Department, which needs to sign off on the extension, will support continuing the full suite of programs, which include efforts to help state and local governments and mid-sized businesses.
“When the right time comes — and I don’t think that time is yet or very soon — we’ll put those tools away,” Mr. Powell said of the emergency lending programs on Tuesday.
Article source: https://www.nytimes.com/live/2020/11/17/business/us-economy-coronavirus