WASHINGTON – Federal Reserve Chairman Jerome Powell has warned of the threat of a long-term recession caused by the spread of the virus and called on Congress and the White House to do more to prevent long-term economic losses.
The Fed and Congress have taken long steps to address the prospect of a sharp recession as the U.S. economy shuts down massively. But Paul warned that bankruptcy is still widespread in small businesses and many people may lose their jobs.
“A deep and long-term recession could hurt the productive forces of the economy in the long run,” President Peterson said before an online discussion with the Institute of International Economics. “Ineligible family and business payments could increase in the coming years.”
Powell said the U.S. government “must do its best to prevent this from happening and may need to take additional policy measures,” Powell said.
He says the Fed will “continue to make maximum use of our tools” until the virus is eradicated, but does not specify what the Fed’s next steps will be.
Paul reiterated earlier warnings that the Fed could fund funding agencies to get out of the crisis. But a protracted recession could bankrupt a health care company without government support.
He said greater support for government spending or tax policy “may be costly, but it can be valuable if it helps prevent long-term economic losses and leaves us in a much stronger recovery,” he said.