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
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
News and information you need, from a source you trust.
In a world where it’s easier to find disinformation than real information, trustworthy journalism is critical to our democracy and our everyday lives. And you rely on Marketplace to be that objective, credible source, each and every day.
This vital work isn’t possible without you. Marketplace is sustained by our community of Investors—listeners, readers, and donors like you who believe that a free press is essential – and worth supporting.