Fed warns of growth slump, lawmakers discuss stimulus

Aides to top US lawmakers met for yet another restart to talks on a new stimulus spending package to aid the economic recovery from the coronavirus downturn.

The discussions, confirmed to AFP by a senior Democratic aide, come as Covid-19 cases surge nationwide and as the president of a regional Federal Reserve bank warned the United States could see growth contract again in the fourth quarter.

The talks between the staffs of House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, both Democrats, and Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy, both Republicans, would address another pandemic relief package, the aide said.

Lawmakers have negotiated for months on passing such a bill, but haven't come to terms on how much to spend and what to spend it on.

Congress authorized the $2.2 trillion CARES Act in March as the pandemic arrived, but its provisions expanding payments to the unemployed and giving loans and grants to small businesses expired in recent months, and analysts fear renewed slowdown.

The US is home to the world's largest Covid-19 outbreak, with 157,950 new infections over the 24 hours prior to Wednesday, the same day that total deaths from the disease climbed above 250,000.

President of the Dallas Federal Reserve bank Robert Kaplan told Bloomberg the resurgence in cases could send US growth back into the red in the OctoberDecember quarter.

"If you'd asked me a month ago, I would have said we're going to grow in the fourth quarter, as much as four or five percent annualized, but... with this resurgence, I think the risks are all (to) the downside," he said.

US growth cratered 31.4 percent in the second quarter as business shutdowns to stop the virus's spread took their toll, but rebounded 33.1 percent as states' moved to ease the shutdowns.

US President-elect Joe Biden said he has selected a treasury secretary who will be accepted across his Democratic Party, and will publicly announce the candidate soon.

"We made that decision and you'll hear that just before or just after Thanksgiving," Biden told reporters, referring to the

a

November 26 holiday.

Financial sources close to Biden have named Federal Reserve governor Lael Brainard as a frontrunner among people the president-elect is considering.

As the lone Democrat remaining on the Fed Board of Governors, she has often staked out minority positions that draw attention, such as opposing moves that ease rules governing big banks.

Black lawmakers have signalled they would want a person of color heading Treasury, like investor Mellody Hobson, one of the most powerful Black women on Wall Street.

Former Fed chair Janet Yellen, former deputy treasury secretary Sarah Bloom Raskin and TIAA chief executive Roger Ferguson are also said to be under consideration.

Biden's candidate would take over from Steven Mnuchin, who has presided over the White House's response to the devastating economic downturn caused by the Covid-19 pandemic.

Mnuchin worked with lawmakers in Congress to pass the $2.2 trillion CARES Act earlier in the year, which helped the economy recover from the mass layoffs and sharp contraction in growth caused by the pandemic.