Federal Reserve Chairman Jerome Powell said Wednesday that social distancing and other measures meant to slow the spread of the novel coronavirus are crucial to the U.S. economy’s recovery from the pandemic.
During a Wednesday press conference, Powell argued that coronavirus-related restrictions that may seem damaging to the economy are essential to repairing the damage wrought by the pandemic.
“The path of the economy is going to depend to a very high extent on the course of the virus and the measures we take to keep it in check,” Powell said. “Social distancing measures and a fast reopening of the economy — they actually go together. They’re not in competition with each other.”
Powell has said from the outset of the coronavirus pandemic that picking between fighting the virus and reopening the economy is a false choice.
Powell, like many economists, has repeatedly said that millions of workers laid off from hard-hit industries will be unable to find jobs until the American public feels comfortable gathering in large groups and in close quarters.
The Fed chairman also noted that several weeks of surging coronavirus cases across the U.S. has slowed the pace of the recovery from the first wave of the pandemic, citing a variety of real-time data sources that track consumer and business activity.
“During the lockdown when we got cases way down, you saw the economy reopening and you saw spending go up and hiring go up,” Powell said. “Now that the cases have spiked again … the high frequency data suggest there’s a slowing pace of growth at least for now. We don’t know how deep or for how long it will be.”
Powell’s comments come amid contentious and lagging negotiations among the Trump administration and congressional leaders over another round of coronavirus economic relief.
President Trump and Republicans insist that the next stimulus bill should be narrowly targeted toward those struggling the most, with the overall goal of bringing as many Americans back to work as quickly as possible. But Democratic leaders are calling for a much more generous package designed to keep pumping support into the economy with an extension of enhanced unemployment benefits and protections from evictions and foreclosures.
Powell praised both parties for seeking another fiscal stimulus deal without weighing in on the details of the talks. Even so, Powell repeated his longstanding call for a robust package that will help economically vulnerable Americans cover their expenses and stay in their homes as the U.S. fights to control the pandemic.
“The labor market really has a long way to go,” he said.