Fed Chair's Appeal: "Recovery Uncertain Without Additional Economic Stimulus"

Treasury Secretary Mnuchin and US House Appear Side by Side... "Purchase Facility Is Merely a Safety Measure to Prevent Decline"
Emphasizing Fiscal Effects Amid Signs of Recovery
US COVID-19 Deaths Surpass 200,000... UK Reimposes Movement Restrictions

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondents Baek Jong-min and Jung Hyun-jin] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), warned that although the U.S. economy has recently shown clear signs of improvement, "if Congress does not agree on additional stimulus measures, even this progress could become uncertain." He emphasized the urgent need for fiscal action amid the situation where COVID-19 deaths in the U.S. have surpassed 200,000 and re-lockdown measures are being discussed in Europe.

According to the Washington Post (WP) and others on the 22nd (local time), Powell appeared before the House Financial Services Committee alongside Treasury Secretary Steven Mnuchin and stated, "The outlook is very uncertain, and if necessary, more measures must be taken." Powell added, "Employment and overall economic activity still fall far short of pre-pandemic levels," emphasizing that "the future path depends on virus control and government policy actions." He also forecasted, "A full recovery will only come when people are confident that it is safe to participate broadly in activities under controlled virus conditions."

Secretary Mnuchin also claimed that the U.S. is in the midst of the fastest recovery from any crisis in history and that third-quarter economic indicators will show tremendous growth, but he expressed the need to prepare for uncertainties. Regarding the deadlock over the economic relief bill, he said, "The President and I are committed to providing support to American workers and businesses," and that the support package "is still necessary." He particularly noted the need for aid to some industries severely affected by COVID-19.

WP evaluated that although both emphasized the necessity of the stalled economic relief bill, Congress has failed to meet expectations. Despite Powell and Mnuchin’s continuous emphasis on the need for additional economic relief legislation, Republicans and Democrats remain in conflict and are delaying agreement. The nomination conflict over the Supreme Court justice candidate has further complicated the additional stimulus bill’s prospects.

In this situation, the White House has even argued that a new stimulus bill is unnecessary, darkening the outlook further. Larry Kudlow, Director of the National Economic Council, stated that day, "I do not believe a V-shaped economic recovery depends on a stimulus package," explaining that "targeted measures for certain specific sectors may be necessary." CNBC reported that Kudlow’s remarks directly contradicted the testimonies given by Powell and Mnuchin before Congress.

This difference in opinion came as the number of COVID-19 deaths in the U.S. exceeded 200,000. The day before, U.S. and European stock markets experienced sharp declines amid concerns over a resurgence of the virus. According to Worldometer, the U.S. COVID-19 death toll was 205,439, with 7,097,148 confirmed cases. The U.S. has the highest number of COVID-19 deaths of any single country worldwide. CNN reported, "This number exceeds the combined fatalities of the five most recent wars: the Korean War, Vietnam War, Iraq War, Afghanistan War, and Gulf War."

COVID-19 is rapidly resurging not only in the U.S. but also in Europe. The UK government announced new measures that include restrictions on pub and restaurant operating hours, expanded mask mandates, limits on indoor sports, and caps on attendance at weddings and funerals. UK Prime Minister Boris Johnson said, "I know this country loves freedom," adding, "Most people are following the rules, but there are still too many violations, allowing the invisible enemy (the virus) to go undetected and spread." He further stated, "If people do not comply with the measures we have introduced, we will have no choice but to take further steps." The Guardian analyzed this as Johnson not ruling out a second lockdown.

According to Worldometer, the UK’s cumulative COVID-19 cases stand at 403,551, with 41,825 deaths. The UK’s daily new cases, which rose to the 7,000s in April and dropped to the 300s in July, have recently surged again, exceeding 4,000 daily cases.