Powell warns of "tragic" risks if there is no new stimulus package

Trump’s announcement of stopping negotiations with Democrats, regarding a new relief bill, came only hours after Federal Reserve Chair Jerome Powell had urged Congress to approve more fiscal stimulus.  

The Fed chairman used the word "tragic" twice in a speech that referred to the country's economic and health situation, in which he insisted on the need for fiscal stimulus.

Before the National Association for Business Economics, NABE, Jerome Powell explained that the effects of the first rounds of aid are weakening at a time when recovery of the economy is far from complete.

He said a lack of sustained support from the federal government could "lead to a weak recovery, creating unnecessary hardship for households and businesses."

But the possibility of a new stimulus package seems increasingly distant, given that it was left without the support of the president who, on his first day of work after receiving a medical discharge, withdrew from negotiations with Democrats due to the lack of agreement on the price tag and other issues.

Before this outcome, Powell had said that an increase in Covid-19 cases would have a tragic impact on the population, but he also used this word to refer to a slow and prolonged economic recovery that “gives rise to recessive dynamics "since the weakness feeds itself and triggers the existing inequalities in the country.

Powell spoke on Tuesday of rising insolvencies and bankruptcies, which will damage the economy's productive capacity. “By contrast, the risks of going overboard with the stimulus are lower than those of falling short. Even if political action turns out to be greater than necessary, it will not be wasted,” he added.

His sayings are backed by facts of reality, as job creation is slowing and consumer income is slowing as well. The relief brought by the CARES Act, which exhausted its most decisive stimuli in July, is wearing off and in its place very little remains, while Americans still struggle to stay afloat.

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