WASHINGTON (Pakistan Point News / Sputnik - 17th September, 2020) The US economy likely needs another stimulus package to provide relief to some 11 million people who remain unemployed because of the measures implemented to fight the novel coronavirus pandemic, Federal Reserve Chairman Jay Powell said during a news conference.
"My sense is that more fiscal support is likely to be needed," Powell said on Wednesday. "Of course, the details for that are for Congress, not for the Fed. But, I would just say there are still roughly 11 million people still out of work due to the pandemic and a good part of those people were working in industries that are likely to struggle."
Congress has so far passed four phases of the Coronavirus Aid, Relief and Economic Security (CARES) Act that have approved $3 trillion to disburse as loans and grants to businesses, paycheck protection for workers and personal aid to qualifying US citizens and residents.
Both Republicans and Democrats have blamed each other for the drag over the fifth instalment of the stimulus. The dispute is over the size of the new relief package, with Democrats suggesting a package of up to $1.5 trillion while the Republicans seeking one of $500 billion.
Powell noted that only about half of the 22 million jobs lost in March and April have been regained so far.
"We say unemployment is 8.4 percent but if you count those people who are misidentified as employed when they're actually unemployed� and ... if you add those back, the level of unemployment is probably 3 percent higher," he said.� "By that metric, the unemployment rate would have been in the 20s in April (itself)."
Powell also said there was a risk for those who had saved some of their unemployment benefits might have to spend them now, given that no new relief is flowing in.
"As the months pass, if there's no follow-up on that, if there isn't additional support, and there isn't a job for some of those people, or from industries where it's going to be very hard to find new work, then that will start to show up in economic activity.� It will also show up in things like evictions and foreclosures and things that will scar and damage the economy," he said.
Earlier on Wednesday, the Federal Reserve forecast showed that US interest rates may remain near zero over the next three years as the United States tries to get the economy back on track from the ravages of the novel coronavirus pandemic.
