WASHINGTON — Jerome H. Powell, the Federal Reserve chair, delivered a blunt message to Congress and the White House on Tuesday: Faced with a once-in-a-century pandemic that has inflicted economic pain on millions of households, go big.
Hours later, President Trump delivered his own message: Forget it.
In a series of conflicting tweets, the president said the economy was “doing very well” and coming back “in record numbers,” suggesting that no additional help was needed while also saying that he would wait until after the election to “pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.”
While the chances of Congress reaching a deal on another package were already slim, Mr. Trump’s directive sent markets swooning as the reality sank in that the economic recovery, which is slowing, would not get another jolt before Nov. 3. The S&P 500 fell more than 1 percent soon after Mr. Trump’s tweet, after having been higher in the moments before.
In deciding to forego any more immediate relief, Mr. Trump could be setting the economy up for the type of painful and “tragic” outcome that Mr. Powell warned about on Tuesday. The Fed chair, who has increasingly called for more government help, said policymakers should err on the side of injecting too much money into the economy rather than too little.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Mr. Powell said in remarks before the National Association for Business Economics.
“Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back wage growth,” he said. “By contrast, the risks of overdoing it seem, for now, to be smaller.”
Nearly seven months into the pandemic, millions of Americans remain unemployed as the coronavirus keeps many service industries operating below capacity. The unemployment rate has fallen more rapidly than many economists expected, dropping to 7.9 percent in September, and consumer spending is holding up. But Mr. Powell again highlighted that the economy’s resilience owed substantially to strong government assistance that has been provided to households and businesses.
That included direct payments to families, forgivable loans to small businesses and an extra $600 per week in unemployment benefits, which Mr. Powell said had “muted the normal recessionary dynamics that occur in a downturn,” like a hit to spending that causes additional layoffs.
But that assistance has since run dry, putting what Mr. Powell called an “incomplete recovery” at risk without the government pumping more money into the economy.
“There is still a long way to go,” he said regarding jobs, adding that “there is likely to be a need for further support” given “many will undergo extended periods of unemployment.”
The comments were a clear signal that the Fed remained worried about the economy’s ability to continue its rebound without more government spending to prop up struggling households and businesses. One big risk, Mr. Powell noted, was that prolonged economic weakness could perpetuate job losses that have weighed most heavily on women, people of color and low-wage workers.
“A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy,” he said. “That would be tragic, especially in light of our country’s progress on these issues in the years leading up to the pandemic.”
Ernie Tedeschi, a policy economist at Evercore ISI, said that while Mr. Powell had made similar statements in the past, “this was more urgent.”
“I get the sense that he is getting worried that if we don’t have another fiscal package, that the recovery we’ve had may be in jeopardy,” Mr. Tedeschi said.
Mr. Powell has become an important influence for members of Congress during the pandemic recession, pushing for continued economic support and emphasizing that concerns about whether the government is taking on too much debt can wait until the crisis has passed. Speaker Nancy Pelosi of California and Representative Richard E. Neal of Massachusetts, are among the Democrats who have cited his advice when discussing their efforts to pass more stimulus.
Yet despite Mr. Powell’s increasingly frequent calls for sustained government help, lawmakers had been unable to reach agreement on additional aid for out-of-work families, struggling local governments and hard-hit businesses, including airlines. House Democrats passed a $2.2 trillion stimulus plan last week, but the White House and Republicans have rejected that price tag as too big.
Top Trump administration officials have played down the need for another big fiscal package by pointing to the falling unemployment rate as a sign that the economy is experiencing a rapid rebound. And many Republican lawmakers have begun publicly fretting about the ballooning federal deficit, which is expected to top $3 trillion this year.
The Fed chair did not weigh in on what sort of package was appropriate. But Mr. Powell, who has a long track record of worrying about the federal debt, has tried to persuade lawmakers that “this is not the time to give priority to those concerns.”
Instead, he has reiterated time and again the importance of returning the economy to full strength, and that both the Fed and Congress need to continue to provide help.
“This will be the work of all of government,” Mr. Powell said. “The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods.”
In his tweets, Mr. Trump said he wanted the Senate to instead focus on getting his Supreme Court nominee, Judge Amy Coney Barrett, confirmed.
But Mr. Powell, along with many of his Fed colleagues, has also made clear that monetary and fiscal policy can only do so much to buttress the economy and that the recovery will be determined in large part by the path of the virus.
Mr. Powell, whose institution is set up to operate independently of the White House, was unambiguous in recommending a solution, one that contrasts with the message and example that has at times been held out by the Trump administration.
“We should continue do what we can to manage downside risks to the outlook,” Mr. Powell said, adding that doing so required “following medical experts’ guidance, including using masks and social-distancing measures.”
One of his colleagues was more blunt — and more worried.
“Because of the United States’s inability to control the virus, we’ve experienced approximately 21 percent of the world’s deaths, despite housing only about 4 percent of the world’s population,” Patrick T. Harker, the president of the Federal Reserve Bank of Philadelphia, said in a separate speech on Tuesday.
The virus is still circulating even as cases come down in some places, Mr. Harker said, and “in recent days, we’ve even seen alarming spikes in other areas, like New York City, that we had hoped had permanently suppressed their infection rates.”
The Fed itself has gone to great lengths to support the economy, cutting interest rates to near-zero in March, rolling out a large bond-buying program and setting up emergency lending efforts, many of them backed by Treasury Department funding.
While the Fed invoked its emergency powers in the 2008 recession, it has gone even further this time, buying municipal debt and corporate bonds to shore up key markets.
Mr. Powell said he did not regret rolling out those programs, which had never been tried before and have faced criticism from lawmakers and watchdog groups.
Some argue that the state and local government program isn’t generous enough. Others insist that the corporate program should come with more strings — like employee retention requirements. Such restrictions would have been difficult or impossible to carry out in the Fed’s current corporate bond program.
“I don’t know how I would have been able to explain to the public that we didn’t go to the limit of what we can do,” Mr. Powell said during a question-and-answer session after his remarks. “History will judge how well we did.”
Bank of Canada keeps key interest rate on hold – CTV News
The Bank of Canada kept its key interest rate on hold Wednesday as it said the country’s economy won’t recoup the losses from COVID-19 until 2022, with the road to recovery dependent on the path of the pandemic.
In July, the Bank of Canada said it believed the country had been spared from a worst-case scenario.
The bank’s updated outlook in its monetary policy report said the rebound over the summer was stronger than expected as the country reversed about two-thirds of the decline seen in the first half of the year.
Officials estimate the economy will shrink by 5.7 per cent this year, but grow by 4.2 per cent next year, and 3.7 per cent in 2022, meaning gross domestic product won’t rebound to pre-pandemic levels for another two years.
In his opening remarks at a late-morning press conference, governor Tiff Macklem said it will take quite some time for the economy to fully recover from the COVID-19 pandemic, and the path will be “uneven across sectors and choppy over time.”
“We know the pandemic is reducing investment and is likely to cause long-lasting damage to some people’s job prospects. These forces will reduce Canada’s economic potential,” Macklem said.
The report forecasts annual inflation at 0.6 per cent this year, 1.0 per cent next year, and 1.7 per cent in 2022.
The bank held its overnight rate target at 0.25 per cent on Wednesday, which is where it will stay until the economy has recovered and inflation is back on target.
The bank also announced Wednesday that it intended to buy more longer-term bonds because those have a “more direct influence on the borrowing rates that are most important for households and businesses.”
James Laird, co-founder of Ratehub.ca said the outlook suggests low interest rates until at least 2023, which is the earliest the bank anticipates the economy would be able to handle higher rates.
The projections for growth and inflation mark a return to the bank’s usual practice of giving a longer view for the economy in its quarterly monetary policy report.
The report said the six months of experience with containment measures and support programs, as well as more information on medical developments like vaccines, has given the bank a better foundation to make a base-case forecast.
Underpinning the bank’s outlook are two major assumptions: That widespread lockdowns won’t be utilized again and that a vaccine or effective treatment will be widely available by mid-2022.
The country has recouped about two-thirds of the three million jobs lost in March and April. Emergency federal aid has replaced lost wages for millions of workers, and provided loans and wage subsidies to struggling businesses.
The recuperation from the drop earlier this year has been uneven, the report notes. The hardest hit sectors, such as restaurants, travel and accommodations, continue to lag.
Workers in those sectors, as well and youth and low-wage workers, continue to face high levels of unemployment, the report says.
All may be hit hard again by any new rounds of restrictions, the report notes. Some areas of the country have already imposed such public health restrictions in the face of rising COVID-19 case counts.
“The breadth and intensity of re-imposed containment measures, including impacts on schools and the availability of child care, could lead to setbacks,” the report says.
“Long breaks in employment have the potential for longer-term impacts on the income prospects of vulnerable groups.”
The report said government aid has played a key role in providing a financial lifeline to individuals and businesses.
Changes to employment insurance and new benefit programs will increase households’ disposable income, officials write, adding that the bank expects government aid to “provide important support to the economy throughout the recovery.
This report by The Canadian Press was first published Oct. 28, 2020
Canadian economy won’t fully recover from COVID-19 until 2022: Bank of Canada
The central bank expects a smaller economic contraction in Canada in 2020, as compared with its July update, followed by slower than previously forecast economic growth in 2021. It did not change its growth outlook for 2022, with economic activity set to return to pre-pandemic levels at the start of that year.
The Bank noted its projections assume new outbreaks will be managed by local and targeted containment measures but said the impacts could be more severe than anticipated.
“There is a serious risk, however, that broader or more intensive restrictions could be required,” it said in its quarterly Monetary Policy Report.
The bank also said it did not expect the output gap to close until 2023. It forecast overall inflation to remain below its 2 per cent target through 2022.
Source: – Global News
Coronavirus stimulus checks: How payments helped the economy — Yahoo U – Yahoo Canada Finance
Insights on the Soil Stabilization Materials Global Market to 2027 – Featuring AggreBind, Altacrete and Caterpillar Among Others
Dublin, Oct. 28, 2020 (GLOBE NEWSWIRE) — The “Soil Stabilization Materials – Global Market Trajectory & Analytics” report has been added to ResearchAndMarkets.com’s offering. The publisher brings years of research experience to the 9th edition of this report. The 373-page report presents concise insights into how the pandemic has impacted production and the buy side for 2020 and 2021. A short-term phased recovery by key geography is also addressed. Global Soil Stabilization Materials Market to Reach $29.1 Billion by 2027 Amid the COVID-19 crisis, the global market for Soil Stabilization Materials estimated at US$23.4 Billion in the year 2020, is projected to reach a revised size of US$29.1 Billion by 2027, growing at a CAGR of 3.2% over the period 2020-2027. Mechanical, one of the segments analyzed in the report, is projected to record 2.7% CAGR and reach US$17.7 Billion by the end of the analysis period. After an early analysis of the business implications of the pandemic and its induced economic crisis, growth in the Chemical segment is readjusted to a revised 4% CAGR for the next 7-year period. The U.S. Market is Estimated at $6.3 Billion, While China is Forecast to Grow at 5.9% CAGR The Soil Stabilization Materials market in the U.S. is estimated at US$6.3 Billion in the year 2020. China, the world`s second largest economy, is forecast to reach a projected market size of US$6 Billion by the year 2027 trailing a CAGR of 5.7% over the analysis period 2020 to 2027. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 0.9% and 2.4% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 1.6% CAGR. Competitors identified in this market include, among others: * AB Volvo * AggreBind Inc. * Altacrete * Carmeuse Group SA * Caterpillar, Inc. * Fayat Group * Global Road Technology International Ltd. * Graymont Ltd. * Irridan USA * SNF Holding Company * Soilworks, LLC. * WIRTGEN GROUPKey Topics Covered: I. INTRODUCTION, METHODOLOGY & REPORT SCOPE II. EXECUTIVE SUMMARY 1. MARKET OVERVIEW * Global Competitor Market Shares * Soil Stabilization Competitor Market Share Scenario Worldwide (in %): 2019 & 2025 * Impact of Covid-19 and a Looming Global Recession2. FOCUS ON SELECT PLAYERS 3. MARKET TRENDS & DRIVERS 4. GLOBAL MARKET PERSPECTIVE III. MARKET ANALYSIS IV. COMPETITION * Total Companies Profiled: 43For more information about this report visit https://www.researchandmarkets.com/r/a1e1jsResearch and Markets also offers Custom Research services providing focused, comprehensive and tailored research. CONTACT: CONTACT: ResearchAndMarkets.com Laura Wood, Senior Press Manager firstname.lastname@example.org For E.S.T Office Hours Call 1-917-300-0470 For U.S./CAN Toll Free Call 1-800-526-8630 For GMT Office Hours Call +353-1-416-8900
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