A week ago, the US treasury secretary Steven Mnuchin along with the chairman warns of the Federal Reserve Jerome Powell while appearing before the Senate banking committee had warned about permanent damage to the US economy if the prolonged lockdowns due to coronavirus continue for months. The duo offered a bleak assessment of the already fragile economy and warned of worse in the coming days. Since the economy came to a grinding halt two months ago, job losses in the US have risen to 36 million, which underscores the concern expressed in the warning as Mnuchin feels that the job scenario will worsen further before they get better. The overall economy will also take more battering before starting to turn around by the end of the year.
After the hearing, the CBO or Congressional Budget Office corroborated the bleak economic outlook with its findings that sees a 38% reduction in economic growth on an annualized basis in the second quarter.
Aimed at reducing the impact of a crisis that resulted in unprecedented job losses, the Congress has already approved a $3 trillion package as the fears of unprecedented unemployment since the Great Depression of the 1930s looms large.
The Federal Bank has brought down the interest rate to zero and also has come forward to support states, businesses, cities, and also financial markets by launching nine lending programs. However, Mnuchin and Powell emphasized the need for more action.
Push for reopening
In recent weeks, the Trump administration has tried to shift the focus. Warns of debate from containment to the need for reopening the economy. Epidemiologists and other experts criticized this heavily as the coronavirus is yet to be brought under control. Criticizing the White House’s moves to reopen parts of the economy, Sherrod Brown, the Democratic senator, asked Mnuchin how many more workers would need to raise GDP by 0.5% Mnuchin replied that no workers should give their lives to lift the GDP.
The way ahead
The economic data from the states that have begun reopening will be vital in determining the steps. Taken by the federal warns government, said, Mnuchin and also Powell. Powell was optimistic about getting a lot of information pretty quickly to know what would be needed. Brown refuted Powell by saying that as per the information available. It never appeared that workers were a priority to the Federal Reserve or the administration.
Brown was unequivocal in his support for workers and also was not interested. To know what the administration and Federal Bank warns were doing for big corporations or banks. How they expect money to trickle down, but how they were ensuring that the money and also authority. Divested on them by Congress would help the people who drive the country’s wheels.
As expected, Mnuchin defended the administrations’ record while acknowledging the unprecedented challenges warns that the Americans were facing. He reiterated President Trump and also the administration’s commitment to providing necessary. Relief to people to help them tide over the crisis.