Fed of­fi­cials talk up ur­gency of fis­cal aid

The Korea Times - - WORLD BUSINESS -

The U.S. econ­omy, bat­tered by a resur­gence in the spread of COVID-19, needs in­creased govern­ment spend­ing to tide over house­holds and busi­nesses and broader use of masks to bet­ter con­trol the virus, U.S. cen­tral bankers said on Mon­day.

The calls for in­creased govern­ment in­ter­ven­tion came as U.S. law­mak­ers and the White House re­sumed talks on a new govern­ment re­lief pack­age, in­clud­ing a pos­si­ble ex­ten­sion of un­em­ploy­ment ben­e­fits that ex­pired on Fri­day.

“The ball is in Congress’ court,” Chicago Fed Pres­i­dent Charles Evans told re­porters on a call. “Fis­cal pol­icy is fun­da­men­tal to a bet­ter base­line outlook, to a stronger re­cov­ery and get­ting the un­em­ploy­ment rate down, peo­ple back to work safely, and ul­ti­mately re­open­ing the schools safely.”

With­out more govern­ment aid, Evans said, “ag­gre­gate de­mand trou­ble is brew­ing.” Trans­lated for non-econ­o­mists: peo­ple could stop spend­ing and the bot­tom could re­ally fall out of the econ­omy. Or, as Rich­mond Fed Pres­i­dent Thomas Barkin put it, “quickly pulling away the sup­port that con­sumers and busi­nesses are re­ceiv­ing would be a pretty trau­matic move for what’s hap­pen­ing in the econ­omy.”

The full court Fed press for more govern­ment spend­ing came as Repub­li­cans ap­peared re­luc­tant to spend much more than the $3 tril­lion Congress had al­ready com­mit­ted to bol­ster­ing the econ­omy in the face of the virus. But things have got­ten worse since then, Barkin said.

“Four months ago, when we did the first stim­u­lus, we thought the econ­omy faced a pot­hole and the stim­u­lus put a plate over it so we could nav­i­gate,” he told the North­ern Vir­ginia Cham­ber of Com­merce.

“Now es­ca­la­tion of the virus may be mak­ing that pot­hole into a sink­hole and cre­at­ing a need for a longer plate.”

Echo­ing those sen­ti­ments in slightly dif­fer­ent terms were Dal­las Federal Re­serve Bank Pres­i­dent Robert Ka­plan and St. Louis Fed Pres­i­dent James Bullard. Ka­plan pushed back on the no­tion that the ex­tra $600 weekly ben­e­fits to the un­em­ployed had made it harder for busi­nesses to hire, while Bullard said ear­lier ef­forts to keep busi­nesses and house­holds whole through the cri­sis have paid off so far. (Reuters)

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