Powell says outlook for economy is ‘extraordinarily uncertain’
In prepared remarks for the Senate Committee on Banking, Housing, and Urban Affairs, Federal Reserve Chair Jay Powell said:
“Economic activity has continued to recover from its depressed second-quarter level. The reopening of the economy led to a rapid rebound in activity, and real gross domestic product, or GDP, rose at an annual rate of 33 percent in the third quarter.
In recent months, however, the pace of improvement has moderated.
Household spending on goods, especially durable goods, has been strong and has moved above its pre-pandemic level.
In contrast, spending on services remains low largely because of ongoing weakness in sectors that typically require people to gather closely, including travel and hospitality.
The overall rebound in household spending is due, in part, to federal stimulus payments and expanded unemployment benefits, which provided essential support to many families and individuals…
As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check…
The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months.
A full economic recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.
Recent news on the vaccine front is very positive for the medium term. For now, significant challenges and uncertainties remain, including timing, production and distribution, and efficacy across different groups.”
Meanwhile lawmakers in Washington have come up with a new stimulus plan.
A bipartisan group of U.S. lawmakers announced a $908B COVID-19 aid package aimed to breaking a monthslong deadlock between Democrats and Republicans over new emergency relief for small businesses, unemployed people, airlines, and other industries during the coronavirus crisis, Reuters’ Richard Cowan and Doina Chiacu report.
The bill has not yet been written into legislation, nor has it been embraced by the Republican White House, Democratic President-elect Joe Biden, or leaders in the Senate or House of Representatives, the authors note.
The package, however, does come with the support of a group of conservatives and moderates who believe it will appeal to a broad swath of Congress, the authors note.
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