There’s still a good amount of fear in this crazed market.
All after Federal Reserve Chairman Jerome Powell said the pace of the U.S. downturn is “without precedent” and cautioned a recovery could take longer than expected. He also said the U.S. may need additional support to pull the U.S. from the brink.
“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Powell said, as quoted by The Wall Street Journal. “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”
All thanks to the COVID-19 pandemic that has stalled the global economy.
Unfortunately, the longer this health risk sticks around, the more likely businesses will fail, and households will be strapped for income Powell added. The U.S. just lost 20.5 million jobs in April 2020. More than 33 million have now claimed jobless benefits since March 2020.
Worse, some analysts believe the U.S. economy could shrink 40% on an annualized basis in the second quarter of the year.
At the same time, Powell noted the Fed is not considering negative interest rates. “I know there are fans of the policy, but for now it’s not something that we’re considering,” he said, as quoted by CNBC. “We think we have a good toolkit and that’s the one that we will be using.”
House Proposes $3 Trillion Stimulus Package
While the Fed races to help keep the economy afloat, the House just proposed a $3 trillion aid package called the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act—to help strengthen state and local government funding and extend relief to Americans.
According to The Wall Street Journal, the HEROES Act would include:
- A second round of direct stimulus payments to individuals, at $1,200 per family member (up to $6,000 per household)
- An extension of the additional $600-per-week unemployment benefits through January 2021
- $200 billion in hazard pay for first responders and frontline workers
- $75 billion for increased coronavirus testing
- $175 billion in rent and mortgage assistance