US Must Keep Virus In Check To Sustain Sooner-Than-Expected Rebound - Fed's Powell
Sumaira FH Published June 30, 2020 | 02:30 AM
WASHINGTON (UrduPoint News / Sputnik - 30th June, 2020) The US economy seems to be bouncing back quicker-than-thought from the COVID-19 pandemic, but maintaining that rebound will require a greater clampdown on the virus, Federal Reserve Chair Jay Powell said in testimony.
"We have entered an important new phase and have done so sooner than expected," Powell said in remarks prepared for delivery before his testimony on Tuesday to the Senate Committee on Financial Services. "While this bounceback in economic activity is welcome, it also presents new challenges - notably, the need to keep the virus in check."
Powell said US employment has moved higher while consumer spending rebounded strongly in May with the economy emerging from business lockdowns imposed since mid-March.
"As the economy reopens, incoming data are beginning to reflect a resumption of economic activity: Many businesses are opening their doors, hiring is picking up, and spending is increasing," the Fed chair said.
Despite this, output and employment remained far below their pre-pandemic levels, with more than 20 million Americans having lost their jobs, he said, adding that the pain has not been evenly spread as those most badly hit were lower-wage workers, women, African Americans and Hispanics.
"The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus," Powell said. "A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities."
The Fed chair's remarks come as a second wave of coronavirus cases have erupted in the United States, taking the number of infections to beyond 2.6 million and deaths above 128,000 as the country emerges from lockdowns.
The US economy shrank 5 percent in the first three months of 2020 for its sharpest decline since the Great Recession of 2008/09. Despite a surprise growth of 2.5 million jobs last month, analysts said the world's largest economy was still at risk of seeing double-digits recession by the end of the second quarter.
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