Federal Reserve Chairman Powell agrees with health experts, saying control of Covid-19 spread should be the first order; not getting people back to work.
Jerome Powell, the financial expert whom Donald Trump appointed as Chairman of the Federal Reserve Bank commented that the U.S. may very well be in a recession at present because of the Covid-19 crisis. Yet he gave assurance that the country’s central bank is not likely to run out of funds even if the federal government releases the Congress-approved $2.2 trillon Coronavirus Relief Package (The CARES Act).
The Federal Reserve Chair, who rarely agrees to appear in a TV broadcast, did not give assurance on how soon the U.S. can get out of the economic slump as a result of the ongoing lockdowns. What he said in the NBC Today show last Thursday is for us to listen to the health experts, on what they are warning and instructing us to do about the pandemic.
Although Mr. Powell said there is “no blank check” to guarantee unlimited financial resources, which the federal bank can provide to support the country’s economy, he gave assurance that there is a tremendous amount the federal reserve bank could do in getting America through the Covid-19 dilemma. He said
“We have the ability to use our emergency lending authorities” … “The federal bank can continue to create loans that aim to support the flow of credit into the U.S. economy.”
The Federal Reserve Chair though, cannot say for how long the country will remain in recession, mainly because he agrees with Dr. Fauci’s statement that the virus will set the timetable. That is why he strongly recommends that the first order of business is to put the spread of the contagion under control, before considering resuming economic activity.
Apparently, Mr. Powell’s statement voices his disagreement with president Donald Trump’s current focus on ending the 15-day period set for the nationwide observance of social distancing restrictions.
The Significance of the Federal Reserve Chair’s Assurances
As chair of the Federal Reserve bank, Jerome Powell’s statements are assurances that businesses do not have to worry about investors pulling out support Mr. Powel has explicitly stated that
The Federal Reserve system can support things through the bank’s emergency powers.” ”Where credit is not flowing, the central bank can, and will step in to offer loans.”
The recently legislated Coronavirus Aid, Relief, and Economic Security (CARES) Act aims to do just that; aside from giving the American public financial assistance, there are several offers of relief and economic security extended to businesses that provide the sources of livelihood to workers and their families.
Even if businesses end up getting drained of resources once the coronavirus crisis is over, the federal government has already readied economic stimulus loans as a means of helping businesses get back in shape. That way, employees and workers can go back to work without fear of getting laid off and with assurance that they will receive compensation.
Still, there is a possibility that once the economic activities resume, some small to medium scale businesses will find it difficult to recover quickly. The state of California for one, which is touted as America’s largest economic contributor, has as many as 19.6 million people making up the country’s labor force. The San Francisco Bay Area, in which seven counties were the firsts to order lockdown and shelter-in-place measures, saw the immediate shut down of non-essential businesses.
Such businesses could have a need for a bankruptcy attorney san diego based may be, to help them manage financial distresses that could lead to bankruptcy.