Consumer spending, manufacturing and business investment are still far below pre-pandemic levels. Brendan Smialowski/AFP via Getty Images
COVID-19

Powell to give Congress another economic assessment

Mitchell Hartman Jun 17, 2020
Consumer spending, manufacturing and business investment are still far below pre-pandemic levels. Brendan Smialowski/AFP via Getty Images

Federal Reserve Chair Jerome Powell will be speaking about the “pandemic economy” with Congress again today.

On Tuesday, he told the Senate Banking Committee there are some signs of stabilization in the economy, and he reiterated the Fed’s intention to keep monetary policy as helpful as possible to aid the recovery.

But, he also said the decline in second-quarter economic growth will be the “most severe on record.” And he warned of long-term risks, from high unemployment to a rising wealth gap.

So, how’s this economy actually doing right now?

Retail sales are up more than 17%. Small businesses and consumer confidence is up strongly heading into summer.

“A lot of the recent headlines have made it seem like things are really good,” said economist Matt Speakman at Zillow.

Speakman said the economy is starting to turn around, after the historic declines of March and April.

“But, in reality, we have a long way to go,” he said.

Consumer spending, manufacturing and business investment are far below pre-pandemic levels. Unemployment is still higher than any time since the Great Depression.

And Mark Zandi at Moody’s Analytics said consumers and business owners still need help.

“If policymakers — Congress and the administration — can’t come up with another fiscal rescue package pretty soon, at least by their August recess, I don’t think the economy will continue to perform well, recession risks will rise,” Zandi said.

Powell has warned of other risks: the continued spread of COVID-19 infections and a surge in business bankruptcies.

COVID-19 Economy FAQs

What does the unemployment picture look like?

It depends on where you live. The national unemployment rate has fallen from nearly 15% in April down to 8.4% percent last month. That number, however, masks some big differences in how states are recovering from the huge job losses resulting from the pandemic. Nevada, Hawaii, California and New York have unemployment rates ranging from 11% to more than 13%. Unemployment rates in Idaho, Nebraska, South Dakota and Vermont have now fallen below 5%.

Will it work to fine people who refuse to wear a mask?

Travelers in the New York City transit system are subject to $50 fines for not wearing masks. It’s one of many jurisdictions imposing financial penalties: It’s $220 in Singapore, $130 in the United Kingdom and a whopping $400 in Glendale, California. And losses loom larger than gains, behavioral scientists say. So that principle suggests that for policymakers trying to nudge people’s public behavior, it may be better to take away than to give.

How are restaurants recovering?

Nearly 100,000 restaurants are closed either permanently or for the long term — nearly 1 in 6, according to a new survey by the National Restaurant Association. Almost 4.5 million jobs still haven’t come back. Some restaurants have been able to get by on innovation, focusing on delivery, selling meal or cocktail kits, dining outside — though that option that will disappear in northern states as temperatures fall. But however you slice it, one analyst said, the United States will end the year with fewer restaurants than it began with. And it’s the larger chains that are more likely to survive.

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