The US recovery from the coronavirus pandemic downturn will be “stronger and faster” with more government aid to protect against the potential for accelerating job losses, Federal Reserve chairman Jerome Powell said Tuesday.
“Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” Powell said in an address to an economics conference.
There is a greater risk of not doing enough to support the economy, he said.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
Powell, who has long said more economic support is likely needed, warned that if economic improvements slow that “could trigger typical recessionary dynamics, as weakness feeds on weakness.”
A long period of “unnecessarily slow progress” could continue to exacerbate existing disparities in the economy, he said, which “would be tragic.”
Despite early success in protecting against job losses, there has been an increase in permanent job cuts and layoffs, Powell warned.
“There is a risk that the rapid initial gains from reopening may transition to a longer than expected slog back to full recovery,” he added.
Limiting the continued spread of the virus will be key to sustaining the economy, including following medical advice about wearing masks and social distancing, he said.