There have been many talks about the state of the US economy recently. The world's largest economy has been hit severely by the coronavirus outbreak. Therefore, the government has spared neither effort nor money to revitalize the pandemic-hit economy.
Federal Reserve Chairman Jerome Powell is confident that additional fiscal stimulus and low interest rates are the keys to the robust economic revival. This is why the US Fed will stick to these measures for the next few years.
Jerome Powell also mentioned the labor market indicators for August. The NFP report turned out to be quite positive showing that the economy added 1.4 million jobs. However, the regulator fears potential job losses in those sectors of the economy, namely tourism, hotel business, and entertainment industries, that have suffered the most due to the pandemic.
In August, the US unemployment rate fell to 8.4% from the previous 10.2% recorded in July. Against the background of quarantine measures imposed to curb the COVID-19 spread, the American economy lost about 22 million jobs. According to estimates, in August 2020, the number of people employed in the United States amounted to 11.5 million, which was less than in February of this year.
Jerome Powell pinpoints that the central bank will provide financial support for the economy as long as needed. Earlier, he talked about a possible increase in fiscal stimulus to prevent a long-term recession in the country. Moreover, Mr. Powell said more than once that the Fed would provide assistance for the most vulnerable categories of citizens, primarily the unemployed.
Interestingly, Jerome Powell, who previously focused on the risks associated with the growing amount of public debt, thinks that there is nothing to worry about. Public debt does not present the kind of elevated risks to the stability of the financial system. He is sure that now there are other more pressing issues that should be tackled. The Fed Chairman assures the public that the Fed will use any tool at its disposal to mitigate the negative impact of COVID-19 on the economy and prevent a further downturn.
