Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin testified before the Senate Banking Committee on Tuesday as part of their quarterly CARES Act report to Congress. Powell and Mnuchin summed up their views on the economy at the start of the hearing — and there was an obvious disconnect.
If you watched Powell and Mnuchin’s testimony — and I know you did — you’d think they were talking about two different economies.
First, Mnuchin said: “The October jobs report showed that the economy has gained back 12 million jobs since April.”
And Powell followed up with: “Although we welcome this progress, we will not lose sight of the millions of Americans who remain out of work.”
Powell looks at the big picture. Mnuchin is focused on the letter of the law. And the CARES Act did specify that some pandemic aid stop at the end of the year as the economy recovered.
Mnuchin acknowledges that some additional help is needed. But he also points to the falling unemployment rate.
“He’ll look at where we are this quarter relative to last quarter and say, ‘Look at the rate of improvement!’ ” said Kathryn Judge, a law professor at Columbia University.
The unemployment rate did fall to 6.9% in October. But that’s still almost double the rate before the pandemic hit the U.S.
Adam Ozimek, chief economist at the jobs website UpWork, said Powell sees the glass as half-empty, while Mnuchin says it’s half-full. And Mnuchin’s optimism could make it harder to persuade wavering members of Congress to vote for another relief package.
“You can’t really rally the troops as long as you’re describing the glass as half-full,” Ozimek said.
If Congress doesn’t pass another relief bill, Williams College economist Ken Kuttner said, the Fed will say, ” ‘Look, if you guys can’t get your act together and pass some fiscal stimulus, it’s going to fall to the Fed to try to take up that slack as best we can.’ “
But Kuttner said the Fed’s tools are not ideal for that. Powell has said repeatedly that the Fed makes loans, not the grants that struggling businesses and jobless workers need right now.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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