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Powell to give Congress another economic assessment

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

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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.

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