Officials cheer signs of US rebound; ponder more aid

The world’s largest economy is showing signs it is rebounding faster than expected from the damage inflicted by the coronavirus pandemic, but US officials on Tuesday signaled more aid may be needed to solidify the comeback.

On top of the unexpected job gains in May, credited to the massive support programs provided by the CARES Act, new data released Tuesday show consumer confidence jumped in June.

“We have entered an important new phase and have done so sooner than expected,” Powell said in testimony before the House Financial Services Committee.

But the April-June quarter is likely to see the largest decline in GDP on record after authorities shut down businesses nationwide, he said, adding a warning that unless COVID-19 is kept in check the economy cannot fully recover.

And with 20 million jobs lost, Powell said a full recovery is “unlikely until people are confident that it is safe to reengage in a broad range of activities.”

The comments come just days after several southern and western US states, including Texas and Florida, were forced to reimpose restrictions after seeing COVID-19 cases spike.

A less encouraging study Tuesday found those states with the fastest growth in new infections are ones that do not require face masks, posting rates more than double the states where mask rules are in place.

Goldman Sachs said in the report that a national mask mandate could “partially substitute” for renewed lockdowns that could subtract nearly five percent from US growth.

The Fed chief appeared at the hearing with Treasury Secretary Steven Mnuchin to discuss the CARES Act approved in late March, which provides massive lending and aid to businesses and families.

Those programs, which include trillions of dollars of lending and bond-buying efforts by the central bank, remain crucial, Powell said.

“The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,” Powell said. (AFP)

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