Powell says 'concerning' rise in COVID-19 cases could hinder economic recovery

Powell says 'concerning' rise in COVID-19 cases could hinder economic recovery
© Bloomberg/Pool

Federal Reserve Chairman Jerome Powell said Thursday that surging coronavirus cases in the U.S. and Europe pose a troubling obstacle to the economic recovery from the onset of the COVID-19 pandemic.

Powell told reporters during a Thursday press conference that “the recent rise in new COVID-19 cases both here in the United States and abroad is particularly concerning” to the central bank and dangerous to the fragile U.S. economy.

“As we have emphasized throughout the pandemic the outlook for the economy is extraordinarily uncertain, and will depend in large part on the success of efforts to keep the virus in check,” Powell said after the Fed announced it would keep interest rates near zero. 

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“All of us have a role to play in our nation's response to the pandemic. Following the advice of public health professionals to keep appropriate social distances and to wear masks in public will help get the economy back to full strength,” he added.

Powell’s warning comes as the U.S. faces a troubling third wave of coronavirus cases that has covered most of the U.S. The U.S. on Wednesday recorded more than 100,000 new coronavirus cases in a single day for the first time during the pandemic, and about 52,000 people currently in the hospital with coronavirus, according to the COVID Tracking Project.

Powell, other top Fed officials, and economists across the public and private sectors have said since the beginning of the pandemic that the U.S. economy would be unable to fully recover until COVID-19 is adequately controlled. 

The failure to curb the pandemic has derailed wide swaths of the economy that depend on people traveling or gathering in close quarters, costing millions of jobs and threatening thousands of businesses.

“It does seem likely that people who have maybe begun to engage in activities that they hadn't—flying, staying in a hotel, going to restaurants, going to bars and things like that—that they may pull back in a situation where suddenly cases are everywhere in your city, your state, your community,” Powell said.

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“That could weigh on economic activity,” he continued, though he noted that the second wave of coronavirus cases seen over the summer, which was contained largely to the south and Sun Belt, had a limited impact on the national economy.

Powell also renewed his call for another fiscal stimulus bill to help accelerate the lagging pace of the recovery, stave off deeper long-term damage, and support millions of Americans facing a dangerous and dire winter.

The Trump administration and House Democrats had attempted to strike a bipartisan coronavirus relief and stimulus deal ahead of Election Day but were unable to overcome key differences over state and local aid, coronavirus testing and certain tax credits. Senate Republicans also objected to the size of the potential bill, which came close to $2 billion, and expressed doubts about its viability in the GOP-controlled upper chamber.

“We'll have a stronger recovery if we can just get at least some more fiscal support when it's appropriate and to the size Congress thinks it's appropriate, Powell said, deferring to lawmakers and the administration on the details.

“There are plenty of people on Capitol Hill—on both sides of the aisle, on both sides of the Hill—who see a need for further fiscal action and understand perfectly why that might be the case,” he said.